Q10Managerial Economics & Financial Accounting
Question
2 marks
What do you mean by income demand.
Answer
Income demand shows the relationship between consumer income and the quantity of a good demanded.
Income Demand refers to the relationship between the income level of a consumer and the quantity of a specific commodity they demand, assuming the price of the commodity and all other factors remain constant.
For normal goods, the income demand is positive (as income rises, demand rises). For inferior goods, the income demand is negative (as income rises, demand falls, e.g., cheap public transport).