1.2.3 Income Elasticity Of Demand Flashcards
1
Q
What is income elasticity of demand?
A
It shows how responsive the demand for a product is to a change in real income
2
Q
What is the elasticity of a normal good?
A
Elasticity of 1 = positive
3
Q
What is the elasticity of a luxury good?
A
Elasticity >1 , positive
4
Q
What is the elasticity of an inferior good?
A
<1. Negative elasticity
