Income & cross elasticity of demand

Last lesson we measured how demand responds to a good's own price. But income moves demand too, and so do the prices of other goods. In this lesson we add two more elasticities to your toolkit — income elasticity (YED) and cross elasticity (XED) — calculating each, reading the all-important sign and size, and using them to tell normal from inferior goods and substitutes from complements. We finish with how real Namibian businesses use both to forecast and to price.