The percentage change in the quantity of a product demanded divided by the percentage change in consumers' incomes.

the percentage change in demand divided by the percentage change in income.

The income elasticity of demand is a measure of how responsive the level of demand is to a change in income. It is an important piece of information to a firm as it helps them to predict how much the demand for their product will grow as the economy grows. We calculate the income elasticity from the following formula: Income elasticity of demand = % change in demand % change in the level of income If the figure is greater than one then the product is described as 'income-elastic' or income-sensitive. This means that demand will grow by more than the level of income. If the figure is less than one, then the product is described as 'income-inelastic' and the demand will grow less than the level of income.

A measure of the relationship between a change in income and a change in quantity of a good demanded

In economics, the income elasticity of demand measures the responsiveness of the quantity demanded of a good to the change in the income of the people demanding the good.