question archive What does income elasticity of demand measure? If income elasticity of demand for ibuprofen was 0

What does income elasticity of demand measure? If income elasticity of demand for ibuprofen was 0

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What does income elasticity of demand measure?

If income elasticity of demand for ibuprofen was 0.63, then you could say that ibuprofen is _____.

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  • It measures the degree of change between quantity demanded is to change in income. Demand elasticity can be determined by the availability of close substitutes, in that if goods are of close substitutes, then their demand is elastic, and if products have no close substitutes their demand is inelastic.

-Necessity and luxuries is another factor, luxurious goods are elastic, and necessity goods are inelastic.

  • Normal product. This is because of the income elasticity of demand for ibuprofen is positive thus making it a normal product.

-A normal good is a good which its demand increases due to an increase in income of an individual and demand falls as income reduces.

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