Income Elasticity of Demand

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Microeconomics

AP Microeconomics

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4 Terms

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Income Elasticity of Demand Formula
% change in qty demanded/ % change in income
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What does it mean if IED is positive?
The good is normal
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What does it mean if IED is negative?
The good is inferior
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Income Elasticity of Demand
The sensitivity to changes in consumer income relative to the amount of a good that consumers demand.