Income Elasticity Of Demand

What does it Mean? A measure of the relationship between a change in income and a change in quantity of a good demanded:

Income Elasticity Of Demand
Investopedia Says... The degree to which a demand for a good changes with respect to a change in income depends on whether the good is a necessity or a luxury. The demand for necessities will increase with income, but at a slower rate. This is because consumers, instead of buying more of only the necessity, will want to use their increased income to buy more of a luxury. During a period of increasing income, demand for luxury products tends to increase at a higher rate than the demand for necessities.

Terms Related Links

Cross Elasticity Of Demand
Demand
Elasticity
Equilibrium
Inelastic
Normal Good
Price Elasticity of Demand
Pricing Power
Quantity Demanded
Supply

Terms Related Links
Economics Basics - Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!

Economic Indicators To Know - The economy has a large impact on the market. Learn know how to interpret the most important reports.




add investopedia foot
www.investopedia.com