Difference between revisions of "Income elasticity of demand"
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'''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. | ||
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Revision as of 22:56, April 24, 2007
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 Goods have a positive Income Elasticity, while Inferior Goods have a negative income elasticity.