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







Related Discussions:- Income elasticity of demand, Assignment Help, Ask Question on Income elasticity of demand, Get Answer, Expert's Help, Income elasticity of demand Discussions

Write discussion on Income elasticity of demand
Your posts are moderated
Related Questions
gap between economic theory and business practice

Q. Evaluate Total Cost - Fixed and Variable ? Total cost (TC) of the firm is a function of output (q). It would increase with the increase in output, which is, it differs dire

Marginal utility approach The downward sloping nature of the demand curve can be explained by using the law of diminishing marginal utility .  For instance, consider a consum

Policies to cure Balance of Payment deficits The measures available to tackle balance of payments deficits include short term measures such as deflation, import controls, dev

CONTRACTING AND INSIDER-OUTSIDER MODELS OF UNEMPLOYMENT   From  the  Walrasian  assumption  of  a market-clearing wage  on  efficiency considerations  -  it was  postulated  th

Advantages of a Free Market System Incentive:   People are encouraged to work hard because opportunities exist for individuals to accumulate high levels of wealth. Choice


The production function can have many uses. It can be used to compute least-cost factor combination for a given output or maximum output combination for a given cost. Knowledge of

a) The following would most likely shift a production possibilities curve to the right? b) Money should not be considered an economic resource ? c)  Which of the following is

SEARCH THEORIES  -  A BRIEF' HISTORICAL OVERVIEW   A search theory of unemployment is found even in the writings of A. C. Pigou in  the inter-war  period. To explain the  high