Year 12 Recap - XED and YED
If you are in Year 13, it is essential that you are confident of the basic foundations of elasticity and can effectively weave in elasticity into your longer responses as an analytical or evaluative tool. XED and YED are additional elasticity tools you can call upon in an exam situation to demonstrate consumers demand sensitivity to changes in the price of related goods and household disposable income.
Cross Elasticity of Demand (XED) helps students quantify the relationships between goods i.e. substitutes and complements. This terminology can be applied to a host of different markets across the economy to best emphasise the interrelatedness between markets. Income Elasticity of Demand (YED) helps students determine how much demand for a good is affected by disposable income changes. This is a valuable tool to develop and use in Paper 3 where the performance of the economy affects household income and demand for goods in individual markets.
Here Jacob guides you around the topic:
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