Elasticity 3 - YED
YED - responsiveness of demand when consumers income changes.
Formula -
Formula -
pajholden on YED
Ok, YED, after you have calculated your answer using the formula above, then you must interpret your answer.
Start with the sign:
- if it's positive, it's a normal good
- if it's negative, it's an inferior good
The absolute value shows the level of income elasticity of demand.
- if the YED is 0 < YED < 1 = income inelastic
- if YED > 1 = income elastic
2008 AP Microeconomics Exam
Answer (D) X is an inferior good and is a complement to Y.
Elasticity Cheat Sheet
