What are the determinants of income elasticity of demand, Microeconomics

Assignment Help:

What are the determinants of income elasticity of demand? 

There are three determinants of income elasticity of demand. These are: Degree of necessity of a good: In a developed economy, as income enhances the demand for luxuries enhances a lot while the demand for necessity enhances a little bit because people cannot consume a lot of basic goods. So the items such as cars have very high income elasticity of demand while items such as potato have low elasticity of demand. Also inferior good have a negative income elasticity of demand.

 


Related Discussions:- What are the determinants of income elasticity of demand

Economics principle.., During the 1990s, technological advance reduced the ...

During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use supply and demand diagrams, how the following markets are affected in terms of pr

How do we obtain total cost curve, Total cost curve (TC) is obtained by add...

Total cost curve (TC) is obtained by adding up vertically total fixed cost and total variable cost curves because the total cost is sum of total fixed cost and total variable cost

Consumer surplus, Two consumers John and grayson like to transfer songs to ...

Two consumers John and grayson like to transfer songs to their phones from jose phone the table represents their willingness to pay and jose willingness to accept for each download

Graphing, I can''t figure out how to graph the aggregate consumption functi...

I can''t figure out how to graph the aggregate consumption function and the aggregate saving function

Why does a monopoly have no supply curve, Why does a monopoly have no suppl...

Why does a monopoly have no supply curve?  A supply curve is a curve that shows the quantity supplied at dissimilar prices, as a monopoly sets the price and the quantity togeth

Elasticity, what are the uses of cross elasticity quantity in demand/

what are the uses of cross elasticity quantity in demand/

Demand and supply help!, Using a demand and supply diagram,analyse the effe...

Using a demand and supply diagram,analyse the effect on the market for Ghanaian football shirts. a. A fall in incomes in Ghana and neighboring countries

Factor markets, A firm in a perfectly competitive product market takes the ...

A firm in a perfectly competitive product market takes the price of the product as given. Similarly, a firm in a perfectly competitive factor market takes the price of the factor

Communications - infrastructure, Communications: Noting the importance...

Communications: Noting the importance of improved communications in increasing productivity and welfare, the New Telecom Policy (NTP) was introduced in 1999. NTP 99 was aimed

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd