At the higher income levels shown, I₁ = 21 and I₂ = 23 and Q₁ =34 and Q₂ = 35. The arc income elasticity computation is shown to the right. The income elasticity is growing smaller as income rises, which would be consistent with personal care products, staple foods and similar goods.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved