It is understandable that for the theories of Price elasticity of Demand and Income elasticity of Demand, for value that is more than 1, it is typically regarded as elastic.
PED > 1, PED is elastic
YED>1, YED is elastic, Normal good - Luxuy good
However, why must the value equates to 1 and not 10?
If PED> 1, example, PED is 1.2,
For a change in price of a particular product by 1.2 percent will result in a change of quantity demanded of that same product by 1.2 percent.
And because 1.2 percent is a very small value, shouldn’t PED be inelastic in this case??
This applies for YED.
If YED is 1.5, it suggests a change in income by 1.5 percent will result in a change of quantity demanded of a particular good by 1.5 percent. And since 1.5 percent is a small value, shouldn’t YED be inelastic and a necessity instead of a luxurious good??
Please advice, thanks.
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