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Unit 2.5(2): Income elasticity of demand (YED)

Income elasticity of demand is the responsiveness of quantity demanded to a change in household income.Yed It is measured by the equation: % change in Qd / % change income = YEDFor example, an 8% increase in household income leads to a 12% increase in the quantity demanded for restaurant meals would have a YED of 12% QD / +8% Y = +1.5This means that for every 1% change in household income, the quantity demanded of restaurant...

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