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→Income Elasticity: adding emphasis to a key sentence
Once you grasp the price elasticity of demand, you’ll see that you can describe the elasticity (or responsiveness) of many other variables in economics.
Once you grasp the price elasticity of demand, you’ll see that you can describe the elasticity (or responsiveness) of many other variables in economics.
Someone's income, like someone’s salary at his job (only about $7.50 an hour at McDonald's), affects his demand for goods. More Mercedes-Benz luxury cars will sell when the average income increases than when it decreases. So economists find it useful to describe the “income elasticity of demand,” which is the percentage change in quantity demanded divided by the percentage change in income.
Someone's income, like someone’s salary at his job (only about $7.50 an hour at McDonald's), affects his demand for goods. More Mercedes-Benz luxury cars will sell when the average income increases than when it decreases. So economists find it useful to describe the '''''“income elasticity of demand,” which is the percentage change in quantity demanded divided by the percentage change in income'''''.
Most goods sell in greater quantities when the income of buyers increases. We all tend to go to restaurants more often, buy new clothes more often, and pay more for goods and services when we our income increases. When our income declines, we reduce our purchases.
Most goods sell in greater quantities when the income of buyers increases. We all tend to go to restaurants more often, buy new clothes more often, and pay more for goods and services when we our income increases. When our income declines, we reduce our purchases.