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📈 Income Elasticity of Demand Calculator

Calculate income elasticity of demand (YED) to see how sensitive demand for a good is to changes in consumer income, and whether it behaves as a normal, inferior, or luxury good.

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What Is Income Elasticity of Demand?

Income elasticity of demand (YED) measures how much the quantity demanded of a good changes when consumer income changes. It helps classify goods as normal, inferior, or luxury based purely on how demand responds to income shifts.

The formula is: YED = (% Change in Quantity Demanded) / (% Change in Income). Each percentage change is calculated as (new value – old value) / old value x 100.

  • YED < 0: Inferior good — demand falls as income rises (e.g. instant noodles).
  • 0 ≤ YED < 1: Normal good, necessity — demand rises with income but proportionally less.
  • YED ≥ 1: Normal good, luxury — demand rises more than proportionally with income.

Note: This calculator uses the basic percentage-change method for general economics education; more precise midpoint elasticity formulas exist for large changes.

Last reviewed August 2026
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