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Income elasticity of demand (view source)
Revision as of 07:03, February 9, 2013
, 07:03, February 9, 2013no edit summary
'''Income elasticity of demand''' is the percentage change in quantity of a good demanded divided by the percentage change in average income. It tells how the demand for a good reacts to changes in the average income. [[Normal good]]s have a positive income elasticity, while [[inferior good]]s have a negative income elasticity.
'''Income elasticity of demand''' is the percentage change in quantity of a good demanded divided by the percentage change in average income. It tells how the demand for a good reacts to changes in the average income. [[Normal good]]s have a positive income elasticity, while [[inferior good]]s have a negative income elasticity.
Among goods with positive income elasticity, [[Necessities]] and more essential goods have the level of elasticity at less than 1, while luxury goods have very large elasticity.
[[Category:Economics]]
[[Category:Economics]]