1. YED Oh it’s not good to be a farmer This is why…

2. When income rises in a population that is… Really poor (low income) – They may buy more food items (e.g. more rice, wheat) But also clothing, shelter, bikes So-so poor (doing ok thanks)(middle income) – They are unlikely to buy basic food items (e.g. rice, wheat, and potatoes) But likely fancy fashions, fancy food and fancy fones (I’m worth it aren’t I?) Mind numbing rich (high income) – Unlikely to buy basic food items But also unlikely to buy more fones or BMWs

3. Consequently, rising income produces uneven sector growth like this… Agricultural Economy (traditional) Manufacturing Economy (developing) Colour in the agricultural, manufacturing, and service sectors

4. This is seen by YED values Basic agricultural products tend to have inelastic YED – Increase in Y results in proportionately lower increase in Qd Manufactured products tend to have elastic YED – Increase in Y results in proportionately greater increase in QD Falling Y hurts ______________ more than ________________

5. Economic Development and YED As income rises – Prices of manufactured goods rise faster than prices of primary goods (consequently, so do profits) – Incomes of farmers and other commodity producers remain relatively low – Do questions 1-7 on page 65

6. Answers to p 65 1.Y is a factor of demand (2PYTAPE). An increase in Y causes more to be demanded at every price and a new demand curve needs to be drawn. 2.Normal – fashion clothing, any manufactured good; inferior – basic good or agricultural commodity 3.Y increase is 200/1000=0.2 Pizza increase 4/8=0.5 Cheese -5/15=-0.33 1. formula is % change Qd over % change Y (not P) 2.YED pizza= 0.5/0.2=+2.5 normal YED cheese=-0.33/0.2=-1.65 inferior 3.demand for pizza rises, demand for sandwiches falls 4.A is inelastic because the change in Q is proportionately less than Y, and B is elastic because the change in Q is proportionately greater than the change in Y. A is most likely to be a necessity. 5.Less developed countries are possibly in a food deficit (more hungry) than developed countries and so extra income goes to satisfy needs. 6.More economic activity is created in manufacturing and service areas than in primary industries. 7.One explanation might be that firms with stagnant incomes may replace labour with machines (capital) in primary industries resulting in price decreases over time through increased productivity