Income Elasticity of demand

Income elasticity of demand refers to the degree of responsiveness of demand to changes in income of consumers. It measures how changes in income of consumers will affect the quantity of commodities demanded by such consumers. Income elasticity of demand is negative for inferior goods sine an increase in income will leads to a decreased demand for them. Income elasticity of demand is measured thus, co-efficient of income elasticity of demand = %change in quantity demand /% change in income.


  1. Positive income Elasticity of demand. Income elasticity is said to be positive if an increase in income of consumers leads to increase in the quantity demand. This applies to normal commodities.
  2. Negative income Elasticity of Demand: if an increase in income of consumers leads to decrease in quantity of goods and services demand, income elasticity is said to be negative. In such a situation, demand falls as income of consumers rises. This applicable to inferior goods

Join Discussion Forum and do your assignment: Find questions at the end of each lesson, Click here to discuss your answers in the forum

Ad: Get a FREE Bible: Find true peace. Click here to learn how you can get a FREE Bible.

For advert placement/partnership, write

Download our free Android Mobile application: Save your data when you use our free app. Click picture to download. No subscription. stoplearn

We are interested in promoting FREE learning. Tell your friends about Click the share button below!