Textbook ExpertVerified Tutor
3 Dec 2021
Introduction
Income elasticity of demand is the responsiveness of the quantity demanded for a good to a change in consumer income.
Normal goods have positive income elasticity of demand; as the income rise more goods are demanded at each price level.
If income elasticity of demand of a commodity is less than 1, it is a necessity goods.
If the elasticity of demand is greater than 1, it is luxury goods or superior goods.
Unlock all Textbook Solutions
Already have an account? Log in