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3 Tutorials that teach Income Elasticity
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Income Elasticity

Income Elasticity

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Author: Catherine Barry
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This lesson will explain Income Elasticity

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Tutorial

Notes on "Income Elasticity"

Terms to Know

Income Elasticity

An economic measure of change in relation to income and

demand for normal, inferior and luxury goods. 

(QA-QB) / (QA+QB) all divided by (IA-IB) / (IA+IB) 

Luxury Goods

A good that offers better quality and features which is consumed 

when income rises.

Normal Goods

Goods for which demand increases as income increases.

Inferior Goods

Goods for which demand decreases as income increases.

Formulas to Know
Income Elasticity

E space equals space fraction numerator begin display style bevelled fraction numerator left parenthesis Q subscript A minus Q subscript B right parenthesis over denominator left parenthesis Q subscript A plus Q subscript B right parenthesis end fraction end style over denominator begin display style bevelled fraction numerator open parentheses I subscript A minus I subscript B close parentheses over denominator left parenthesis I subscript A plus I subscript B right parenthesis end fraction end style end fraction