ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If income rises by 12% and demand rises by 20%, what is the YED?
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1.97
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0.6
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1.67
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0.92
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Explanation:
Detailed explanation-1: -On the other hand, the formula for calculating YED is as follows: YED = percentage change in quantity demanded/percentage change in income.
Detailed explanation-2: -For example, if your income increased 10% and demand for Tesco Value tea fell 15%. The YED =-15/10 =-1.5.
Detailed explanation-3: -A. The demand is inelastic when the percentage change in quantity demanded is less than the percentage change in price.
Detailed explanation-4: -Inelastic demand occurs when changes in price cause a disproportionately small change in quantity demanded. For example, a good with inelastic demand might see its price increase by 30%, but demand falls by only 10% as a result.
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