Glossary · Micro · Elasticity

Income elasticity of demand (YED)

How strongly demand responds to a change in income, measured as the percentage change in quantity demanded divided by the percentage change in income. Positive means a normal good, negative means an inferior good, and above 1 marks a luxury.

Also called: YED

Taught in: Income Elasticity — Normal, Inferior, Luxury

Related terms

Normal good Inferior good Luxury good

More from elasticity

Cross-price elasticity of demand (XED)Determinants of PED Determinants of PES Elastic demand Inelastic demand Midpoint formula Perfectly elastic demand

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