Income Elasticity of Demand (YED) measures the responsiveness of the quantity demanded of a good to a change in consumer income. It is an essential concept for entrepreneurs as it helps in understanding how changes in income levels can affect the demand for their products or services. YED is calculated using the following formula: YED = % Change in Quantity Demanded / % Change in Income The value of YED can be positive or negative, indicating whether the product is a normal good or an inferior good, respectively.