Learning objectives
Define income elasticity of demand and calculate YED = %ΔQd ÷ %ΔY
Use the sign and size of YED to classify goods as inferior, normal, income-inelastic necessities or income-elastic luxuries
Explain the factors that influence YED, such as the level of income and the availability of better alternatives
Apply YED to how firms plan product ranges, output and stocks as incomes rise in booms and fall in recessions
Continue with a revision plan
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