Respond to the following in a minimum of 175 words:How do you think income elasticity affects a...

Question

Respond to the following in a minimum of 175 words:

How do you think income elasticity affects a normal good versus an inferior good? Provide a real-world example.

Please Note****** Please simply follow the instructions provided as this is only a weekly discussion topic for participation.

Komalavalli · Accepted Answer

Income Elasticity demand (IED):
IED refers to the sensitivity of the quantity demand for a particular good to a change in real income of a consumer who buy those good by keeping all other things constant.
Income elasticity and normal good:
If IED is greater than zero which is positive, then the good is said to normal good. There exists a positive relationship between quantity demanded for a normal good and income. Increase in income of a consumer leads to increase quantity demand for a particular good.
Example:
Clothing is a normal good, this represents when a consumer income increases the quantity demand for clothing increases.
Income elasticity and Inferior good:

Respond to the following in a minimum of 175 words: How do you think income elasticity affects a normal good versus an inferior good? Provide a real-world example. Please Note****** Please simply...

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