About this document
Understanding Income Elasticity of Demand by Cerly is a document available to read on EtoBox.
Income Elasticity of Demand (IED) measures how demand for goods/services changes with income changes, with normal goods having IED greater than zero and inferior goods having IED less than zero. A good is considered income elastic or a luxury if IED is greater than one, while it is income inelastic or a necessity if IED is less than one. The document includes sample problems to illustrate these concepts.
- Author
- Cerly
- Language
- EN