Difference between revisions of "Income elasticity of demand"
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m (Income Elasticity of Demand moved to Income elasticity of demand over redirect: Conform to MoS) |
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| − | '''Income | + | '''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. |
[[Category:Economics]] | [[Category:Economics]] | ||
Revision as of 09:33, October 13, 2008
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.