Principles of Microeconomics / Unit 4 MIC 0319 short lesson, about 20 seconds
Income Elasticity of Demand
Captions available
The idea
Income elasticity of demand is the percentage change in quantity demanded at a given price divided by the percentage change in income. Positive means a normal good; negative, inferior.
In practice
A ten percent income rise raising restaurant meals fifteen percent gives one point five.
Where people slip
It measures a shift of the demand curve, not a movement along it; the price is held fixed.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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