YED

• Income is a crucial determinant of demand in economics, and income elasticity of demand measures the responsiveness of quantity demanded given a change in income.
• The equation for calculating income elasticity of demand is: the percentage change in quantity demanded over the percentage change in income.
• To convert numbers to percentage change form, divide the difference between two numbers by the original number and multiply by 100.
• If the figure for income elasticity of demand is positive, the good is a normal good, meaning as income goes up demand goes up proportionately more than the increase in income.
• If the figure for income elasticity of demand is negative, the good is an inferior good, meaning as income goes down demand goes up proportionately more than the decrease in income.
• For a normal good, if the figure for income elasticity of demand is greater than one, it is a normal luxury, meaning as incomes rise demand increases proportionately more than the rise in income.
• If the figure for income elasticity of demand is less than one, the good is a normal necessity, meaning as incomes rise demand increases proportionally less than the rise in income.
• For an inferior good, if the figure for income elasticity of demand is greater than one, demand is income elastic, meaning as incomes rise quantity demanded increases proportionately more than the rise in income.
• If the figure for income elasticity of demand is less than one, the good is income inelastic, meaning as incomes rise quantity demanded increases proportionally less than the rise in income.
• The difference between 30,000 and 30,000 is 0, meaning there is no change in income.
• If the demand curve is upward-sloping, it indicates normal goods and a positive relationship between income and demand.
• The quantity demanded of fast food meals has fallen from 100 to 60 meals, representing a 40% decrease.
• Inelastic demand occurs when income and quantity demanded are parallel, represented by steep demand curves.
• Income elastic demand occurs when income and quantity demanded are diverging, represented by shallow demand curves.
• As incomes increase, the quantity demanded of furniture items increases proportionately greater than the increase in incomes, indicating income elasticity.
• Income goes on the y-axis, allowing for downward-sloping demand curves and upward-sloping demand curves.
• As incomes increase, the quantity demanded of fast food meals decreases proportionately less than the increase in incomes, indicating income inelasticity.
• The sign of the quantity demanded of fast food meals is negative, indicating an inferior good.
• The quantity demanded of furniture items per household in a year has increased from 12 to 21, representing a 75% increase.
• The sign of the quantity demanded of furniture items is positive, indicating a normal good.
• If the demand curve is downward-sloping, it indicates inferior goods and a negative relationship between income and demand.
• For an inferior good, if the figure for income elasticity of demand is zero, demand is perfectly income inelastic, meaning there is no relationship at all between income and quantity vendors.