Note that price falls by less than the full amount of the subsidy. This suggests that the firm keeps part of the subsidy. If YED is negative then the good is inferior. People use an increase in income to buy less of this good and more of a superior substitute. If YED is positive then the good is normal .
Consumers use an increase in income to buy more of the good.
If XED is positive then the two goods are substitutes. If XED is negative then the two goods are complements. These pages are based on original material written by Richard Young of Wood Green School Witney.