These might include supermarket own brands compared with specificīrands or fake leather compared to real leather. Goods or services with such elasticity are called inferior goods. If income elasticity is negative, demand decreases as income rises. Income elasticity may be positive or negative. What do they show? What do they tell an economist? Syllabus: Distinguish, with reference to YED, between necessity (income inelastic) goods and luxury (income elastic) goods.Įlasticity can be calculated and a range of values found. Normal and inferior goods Syllabus: Show that normal goods have a positive value of YED and inferior goods have a negative value of YED. Sometimes preferred over poorer quality goods. These are called inferior goods - think: better quality goods are However there are goods that when income increases less is demanded and The demand for some products tends to increase as income increases and these are called normal goods. The sign is as important (or more important even) as the numerical value. The number youĬalculate from the formula above shows you h ow far the demand curve shifts but not the direction it shifts in - the sign gives the direction. Shift of the demand curve´s position on a diagram. Is a non-price determinant of demand then a change in Pz will cause a Since a change in the price of other goods (Pz remember) YED is calculated by dividing the %change in the quantity demanded for a good or service by the % change in income. Income elasticity of demand is calculated and defined as: Syllabus: Calculate YED using the following equation. The income elasticity of demand is a measure of the responsiveness of the quantity demanded to changes in disposable income. Section 1.5 Theory of the firm - simulations and activities.Section 1.5 Theory of the firm - questions.
1.5 Theory of the firm - notes (HL only).Section 1.4 Market failure - simulations and activities.1.3 Government intervention - simulations and activities.1.3 Government intervention - questions.Section 1.2 Elasticities - simulations and activities.Elasticity along a straight line demand curve.1.1 Competitive markets - simulations and activities.1.1 Competitive Markets: Demand and Supply - notes.1.1 Competitive Markets: Demand and Supply.Topic pack - Microeconomics - introduction.
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