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Topic: Miscellaneous
Number of pages / Number of words: 5 / 1294
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This is true in cases of things like cheap margarine. As people earn more they switch to butter or better quality margarine. Inferior goods have a negative elasticity of demand.

The rate at which the desire for the good is satisfied as consumption increases is also a determinant of income elasticity of demand...

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The more quickly people become satisfied, the less their demand will rise as income increases.

The level of income of the consumers is the last determinant factor of income elasticity of demand. Poor people will behave differently, in the event of a rise income, to a rich person. For example, for a given rise in income, a poor person may buy a lot more butter whereas a rich person might only buy a little bit more...

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