Income Elasticity of Demand
As the income of the consumer increases the quantity demanded also changes.Whether it is positive (the quantity demanded increases) or negative (the quantity demanded decreases).
Positive Elasticity of Demand:
Ex: At first I had a 10k mobile But as the income of my father increased I bought 25k mobile .Here as the income increases we opt for better things and the demand increases.
Negative Elasticity of Demand:
Ex: When I am in school less pocket money is given to me so I used to buy small chocolates but when i am in college the pocket money is more so I used to buy whatever chocolates i like.Here as the pocket money increases i opt to buy big chocolates which are costly rather than small chocolates which cost less.
No comments:
Post a Comment