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Income Elasticity of Demand

income elasticity of demand (YED), which calculates how much consumer demand changes when personal wealth fluctuates. It distinguishes between normal goods, which see increased demand as wealth rises, and inferior goods, which consumers abandon for better alternatives as they become wealthier. Within the category of normal goods, the material differentiates between necessities, which are income inelastic, and luxuries, which show high sensitivity to income shifts. These elasticities have significant implications for industry growth, as sectors like services and manufacturing typically expand faster than agriculture during economic development