Income elasticity refers to how responsive the demand for a good or service is to changes in income. It measures the impact of changes in income on the quantity demanded of a product. If a product has high
income elasticity, it means that as people's income increases, the demand for that product will increase at a proportionally higher rate. On the other hand, if a product has low
income elasticity, it indicates that as income rises, the demand for that product will only increase slightly or not at all.
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