Income Elasticity of Demand (YED)
Measure of how demand changes when consumer income changes.
Formula
YED = % change in quantity demanded ÷ % change in income
Real World
During the 2008 financial crisis, demand for Lidl and Aldi rose sharply as incomes fell — their negative YED confirmed them as inferior goods relative to premium supermarkets.
Exam Focus
Always state the sign and interpret it — a positive YED alone scores no marks without identifying it as a normal good.
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