YED Flashcards
1
Q
What is income elasticity of demand?
A
The responsiveness of demand to change in income
2
Q
What is income elasticity of demand equation?
A
% change in quantity demanded/ % change in income
3
Q
What does it mean if the income elasticity if greater then 1?
A
Demand is said to be income elastic, demand will increase
4
Q
If the value is less then 1 what does it mean?
A
Income inelastic, demand will decrease
