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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Although own-price elasticity of demand will almost always be negative because of the law of demand, income elasticity can be negative, positive, or zero.
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4.3. Income Elasticity of Demand: Normal and Inferior Goods
interest. For example, if the income elasticity of demand for some good has a value of 0.8, we would interpret that to mean that whenever income rises by one percent, the quantity demanded at each price would rise by 0.8 percent. <span>Although own-price elasticity of demand will almost always be negative because of the law of demand, income elasticity can be negative, positive, or zero. Positive income elasticity simply means that as income rises, quantity demanded also rises, as is characteristic of most consumption goods. We define a good with positive income elastic


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