7. The income elasticity of demand is the percent change in the quantity of a good demanded...
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7. The income elasticity of demand is the percent change in the quantity of a good demanded when a consumer’s income changes divided by the percent change in income. The income elasticity of demand indicates how intensely the demand for a good responds to changes in income. It can be negative; in that case the good is an inferior good. Goods with positive income elasticities of demand are normal goods. If the income elasticity is greater than 1, a good is income-elastic; if it is positive and less than 1, the good is income-inelastic.
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Related Book For 
Essentials Of Economics
ISBN: 9781429218290
2nd Edition
Authors: Paul Krugman, Robin Wells, Kathryn Graddy
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