Income Elasticity of Demand Quiz

What does YED stand for?

• Yearly Elasticity of Demand

• Yield Elasticity of Demand

• Yield Effect of Demand

• Income Elasticity of Demand

What is the formula for calculating YED?

• % change in Qd / % change in price

• % change in Qd / % change in income

• % change in price / % change in income

• % change in income / % change in Qd

What type of goods have a YED between 0 and 1?

• Luxury goods

• Normal goods

• Inferior goods

• Necessity goods

If a good has a YED greater than 1, it is classified as what?

• Necessity good

• Normal good

• Luxury good

• Inferior good

What is the YED of inferior goods?

• Positive

• Zero

• Negative

• Undefined

What does the Engel Curve illustrate?

• The relationship between supply and demand

• The relationship between income and supply

• The relationship between income and demand

• The relationship between price and demand

What happens to the demand for rice as income increases beyond a certain point?

• It fluctuates randomly

• It remains constant

• It decreases

• It increases proportionately

Which of the following is an example of a luxury good?

• Basic food

• Electricity

• Public transport

• Designer clothing

What is the YED for a good that is considered a necessity?

• Exactly 1

• Greater than 1

• Less than 0

• Between 0 and 1

How do businesses typically respond to rising incomes?

• By reducing product variety

• By lowering product quality

• By improving product quality

• By increasing product prices