Amrita was consuming 4 kgs of onion per month when her income was Rs. 1000 per month. When her income increased to Rs 1200 per month she started consuming 5 kgs of onion per month is the demand for onion elastic or inelastic with respect to income? Assuming to change in other determinants of demand.
Answers
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The demand for Onion is elastic with respect to income
Explanation:
If a change in the price results in a large change in quantity demanded, the product is said to be elastic (responsive to price changes). On the other hand, a product is deemed inelastic if a large change in price results in a small amount of change in quantity demanded.
In simple words,
1. If the demand for a particular product changes with the change in income that product is known to be elastic with respect to income.
2. If the demand remains the same after a change in income that product is known to be inelastic with respect to income.
So, by these statements above we conclude that the demand for onion changes with respect to change in income.
Therefore, The demand for Onion is elastic with respect of Income.