What is the relationship between income elasticity of demand and a normal and inferior good?

Firstly, we must define what income elasticity of demand means. This is the responsiveness of the quantity demanded of a good to a change in income. A normal good is characterised by a positive income elasticity of demand, which means that people demand more of the good as their income rises. An example of this good might be normal internet broadband or TV's to buy for your house. An inferior good is characterised by a negative income elasticity of demand, which means that people demand less of the good as their income rises. An example of this might be a cheap car such as a Kia!

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Answered by Cameron B. Economics tutor

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