Income elasticity of demand (YED)

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  • Income elasticity of demand (YED)
    • %change in quantity demanded/%change in income
    • Limitations
      • Difficult to develop
      • Use perceived demand curves
      • Out of date in quick changing markets
    • Normal goods
      • An increase in income... Increases demand
      • A decrease in income... Decreases demand
    • Inferior goods
      • An increase in income... Decreases demand
      • A decrease in income... Increases demand

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