Question

what is the effect of increase or decrease in the level of income on elasticity of demand? ​

Answer 1

Answer:

Basically, a negative income elasticity of demand is linked with inferior goods, meaning rising incomes will lead to a drop in demand and may mean changes to luxury goods. A positive income elasticity of demand is linked with normal goods. In this case, a rise in income will lead to a rise in demand.

Answer 2

Answer:

If the income elasticity of demand is positive, the good is considered to be a normal good – implying that when income increases, the quantity demanded at any given price increases.

Explanation: