2.5.7—Income elasticity of demand Topic Practice
2.5.7—Income elasticity of demand Topic Practice
Students practise calculating income elasticity of demand (YED) from data tables and interpreting its sign and magnitude for real households and economies.
How this is tested
- calculate YED from %DeltaQd divided by %DeltaY using household or national data
- identify whether a good is normal or inferior based on the sign of YED
- compare YED magnitudes across goods to predict relative demand growth