Income Elasticity of Demand Formula

The following equation uses initial and final incomes and demands to calculate the income elasticity of demand.

income elasticity of demand formula

Income Elasticity of Demand Definition

Income elasticity of demand is a ratio of total income to total demand. Similar to price elasticity of demand, this measures the change of a total income as demand in a specific product or group of products changes over time. More deeply this elasticity is also related and rooted in the price elasticity of supply as well, which can be explored using the link below.

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