Asked by
Dhanraj Vansadia
on Nov 25, 2024
Verified
An income elasticity coefficient of −1.8 means the product is a normal good.
Income Elasticity
A measure of how much the demand for a good or service changes in response to changes in consumers' income.
Coefficient
A numerical or constant quantity placed before and multiplying the variable in an algebraic expression, often indicating proportionality.
Normal Good
A good for which demand increases as consumer income rises, and decreases as consumer income falls.
- Understand the concept and significance of income elasticity of demand.
- Distinguish between the different types of goods based on income elasticity (normal, inferior, luxury, necessity).
Verified Answer
AS
Learning Objectives
- Understand the concept and significance of income elasticity of demand.
- Distinguish between the different types of goods based on income elasticity (normal, inferior, luxury, necessity).
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