Get premium membership and access questions with answers, video lessons as well as revision papers.

Which are the determinants of income elasticity?

      

Which are the determinants of income elasticity?

  

Answers


Wilfred
The main determinants of income elasticity of demand are;-
a) The nature of the need that the commodity covers; the percentage of income spent on food declines as income increases (this is the Engel’s law )

b) The initial level of income of a country. For example a TV is a luxury in an underdeveloped country while it is a necessity in a developed (one with high per capita income)

c) The time period, because consumption patterns adjust with a time lag to changes in income.
Wilfykil answered the question on March 20, 2019 at 09:02


Next: Give the Applications of indifference curve analysis
Previous: Explain the Ecosystem structure.

View More Intermediate Microeconomics Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions