Question 5:(a) Define the Income elasticity of demand?The income elasticity of demand is an economic way to measure the quantity demanded for a good aaccording to the change in real income level of individuals. To calculate it, percentage change inquantity demanded is divided by percentage change in income.Types of income elasticity of demand:-1. Elastic high - when the quantity demanded is high as a result of rise in income.2. Unitary:-when the change in income is propationate to the change in quantity demanded.3. Inelastic/ low:-when the increase in income results less quantity demanded for a good.(b) What is a normal and an inferior good?

In economics, income elasticity is used to understand the consumer behavior at the marketplace with…

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Question 5: (a) Define the Income elasticity of demand?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...

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