This is the measure of how much the demand for a flood changes when there is a change in the income of a consumer
Income Elasticity of Demand (YED) is calculated by:
UK average income rises from £25k to £30k and as a result demand for 3D TVs rises from 200,000 units to 300,000 units. Calculate YED (show your working):
Change in QUantoty Demanded = 200,000 300,000 ¶ 300000 / 100000 =33.3%
Change in income = 25-30 K ¶ 30 / 5 = 16,6%
Is the demand for 3D TVs income elastic or inelastic?
It is Elastic. Demand falls by a lower Percentage then the Price rises.
Plot the demand curve based on the information above (fully label the diagram):
In the UK, a survey was done which calculated that ‘normal’ lager had a YED of +0.6 whilst ‘premium’ lager had a YED of +1.5. Using the data explain why this might be the case
This can be seen as a Engel Curve example. The more money somebody may have, the more they see normal larger as an inferior good, and decide to buy more luxury goods such a the premium lager.
YED for a normal good should be negative
YED for a luxury good should be positive and greater than 1
YED for an inferior good should be negative
The London Underground is estimated to have a YED +0.2. This is because it is income inelastic
In recent years, demand for French wine in China has increased significantly. Explain, using YED, why this is the case and estimate YED. You can use your phone, tablet, PC to help you
The YED had gone positive. people in CHona got richer and decided to buy more luxury whine from France, then their own inferior one.
Look at the chart above regarding the weekly consumption of cigarettes in the UK by gross decile group.
Does this chart suggest that cigarettes can be considered a