Income elasticity of demand, Managerial Economics

Income elasticity of demand

The income elasticity of demand measures the degree of responsiveness of the quantity demanded of a product to changes in income.  Its co-efficient is as follows:

  EY  =   Percentage change in quantity demanded

             Percentage change in income

This we may write as:

EY  =  DQ/Q

           DY/Y

Which can be simplified as:

EY  =  DQ  ·   Y

     =  DY      Q

Where Y  =  Income

Posted Date: 11/27/2012 6:37:24 AM | Location : United States







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