What is the relationship between income elasticity of demand and a normal and inferior good?

Firstly, we must define what income elasticity of demand means. This is the responsiveness of the quantity demanded of a good to a change in income. A normal good is characterised by a positive income elasticity of demand, which means that people demand more of the good as their income rises. An example of this good might be normal internet broadband or TV's to buy for your house. An inferior good is characterised by a negative income elasticity of demand, which means that people demand less of the good as their income rises. An example of this might be a cheap car such as a Kia!

CB
Answered by Cameron B. Economics tutor

3174 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

It is the oil price crash of 2014, and the Norwegian government is fearing a recession. What policies can be enacted to avoid a recession?


What Components make up the Aggregate Demand Curve


Evaluate the case for the introduction of subsidies for agricultural produce. (15 marks)


Explain 4 key sources of monopoly power.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning