Sunday

PED and Income

If demand is elastic and our income rises, does demand become inelastic - or is there a shift in demand (to the right, assuming it is a normal good)?
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1 comment:

  1. Hai Long25 March 2009 at 03:45

    The income elasticity of demand for normal good is positive, which means that as your income rising, it will lead to the rise in demand as well. Therefore the demand curve will shift to the right.
    In the otherhand, I think the rise in REAL income will make the demand curve become more inelastic.

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