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Income Elasticity of Demand is described below:
Income elasticity of demand is the percentage change in the quantity demanded/required with respect to the percentage change in income of consumer.
Income elasticity of demand can be illustrated by the formula given below:
Y?d = Percentage change in Quantity Demanded
Percentage change in Income
If a 2% increase in the consumer's incomes causes an 8% rise in the product's demand, then the income elasticity of demand for the product will become:
Y?d = 8% =4
2%
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