Income Elasticity of Demand
This is the
measure of change in quantity demanded of a good due to change in real income
of the consumer. This can be computed as percentage change in quantity demanded
divided by percentage change in income.
Example:
When I was in Standard 5 my pocket money was Rs 10 per day. I used to consume
dosa at school canteen with Rs 10. But in standard 7 my pocket money was
increased to Rs 50. Then onward I used to consume dosa occasionally on the
other hand consumption of chips and cold drinks increased.
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