Question

Give the formula to measure income elasticity of demand.

Answer 1

Income elasticity of demand can be measured with the help of the following formula:

e_y = `"Percentage change in Quantity Demanded"/"Percentage change in Income"`

e_y = `(DeltaQ)/(DeltaY)xxY/Q`

where, e_y stands for income elasticity of y demand

Y stands for initial income

ΔY stands for change in income

Q stands for initial quantity

ΔQ stands for change in quantity.