{"id":4478,"date":"2021-08-03T10:13:07","date_gmt":"2021-08-03T04:43:07","guid":{"rendered":"https:\/\/www.goseeko.com\/blog\/?p=4478"},"modified":"2026-03-23T05:01:14","modified_gmt":"2026-03-22T23:31:14","slug":"what-is-income-elasticity-of-demand","status":"publish","type":"post","link":"https:\/\/www.goseeko.com\/blog\/what-is-income-elasticity-of-demand\/","title":{"rendered":"What is Income Elasticity of Demand?"},"content":{"rendered":"\n

The income elasticit<\/a>y of demand is measures the sensitivity of quantity demanded for a goods or services to a change in consumer\u2019s income<\/p>\n\n\n\n

Formula –  Percentage change in the quantity demanded\/Percentage change in the consumer\u2019s income<\/p>\n\n\n\n

Types<\/strong><\/h4>\n\n\n\n
    \n
  1. Positive income elasticity of demand –<\/li>\n<\/ol>\n\n\n\n

    When a proportionate change in the income of a consumer increases the demand for a product and vice versa, it is said to be positive. In case of normal goods, the income elasticity of demand is generally found positive.<\/p>\n\n\n\n

    \"\"\/<\/figure>\n\n\n\n

    In Figure, DYDY is the curve representing positive income elasticity of demand. The curve is sloping upwards from left to the right, which shows an increase in demand (OQ to OQ1) as a result of rise in income (OB to OA).<\/p>\n\n\n\n

    2. Negative income elasticity of demand \u2013<\/h5>\n\n\n\n

    When a proportionate change in the income of a consumer results in a fall in the demand for a product and vice versa, is negative. In case of inferior goods, it is generally found negative.<\/p>\n\n\n\n

    \"\"\/<\/figure>\n\n\n\n

    In Figure, DYDY is the curve representing negative income elasticity of demand. The curve is sloping downwards from left to the right, which shows a decrease in the demand as a result of a rise in income. As shown in Figure, with a rise in income from 10 to 30, the demand falls from 3 to 2.<\/p>\n\n\n\n

    3. Zero income elasticity of demand \u2013<\/h5>\n\n\n\n

    When a proportionate change in the income of a consumer bring no change in the demand, is zero. It generally occurs for utility goods such as salt, kerosene, electricity.<\/p>\n\n\n\n

    \"\"\/<\/figure>\n\n\n\n

    In Figure, DYDY is the curve representing zero elasticity of demand. The curve is parallel to Y-axis that shows no change in the demand as a result of a rise in income. As shown in Figure, with a rise of income from 10 to 20, the demand remains the same i.e. 4.<\/p>\n\n\n\n

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