Define income elasticity. state its formula
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In the formula, the symbol Q0represents the initial demand or quantity purchased that exists whenincome equals I0. ... If the income elasticity of demand is negative, then the commodity is an inferior good. An inferior good is one whose demand decreases as incomes increase or demand increases as incomes decrease.
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The income elasticity of demand is a measurement that explains how the demand for a good or service changes when income changes.
Formula
income elasticity of dimand=percentage change in quantity demand / percentage change in income.
Formula
income elasticity of dimand=percentage change in quantity demand / percentage change in income.
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