Finding income elasticity involves measuring the change in what variable?

Income elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in consumer income. To find income elasticity, one must look at how the quantity demanded changes in relation to shifts in income levels.

When calculating income elasticity, the formula typically used is the percentage change in quantity demanded divided by the percentage change in income. This relationship indicates whether a good is a normal good (where demand increases as income increases) or an inferior good (where demand decreases as income increases). Understanding this concept is crucial in microeconomics, as it helps predict consumer behavior regarding different types of goods based on income changes.