Question

4. If YED is negative, what type of product is it? Give an example of a real life product that might have YED < 0

5. If PED = .006, what type of product is this?

Answer 1

4) YED = Income elasticity of demand.

If the income elasticity of demand is negative that means the good is inferior. As the income rise the demand for the good falls. Public transport is a very good example of such goods and services. When the income of the individual is low the demand for public transport is high, as the income rises people demand less of public transport.

5) IF price elasticity of demand is 0.006 that means the good is inelastic and its demand doesn't change with price. example salt, petrol.