(eta) to represent income elasticity of demand.
We will use the lower case greek letter (eta) to represent income elasticity of demand.
As we said, the sign of indicates whether the good is normal or inferior, but what about
the size of the income elasticity measure?
As always, the size gives some indication of the strength of
the relationship. If you think about it, you can probably figure
out for which goods a change in income has a strong effect and
for which it doesn't. As it turns out, the goods for which a change
in price has a strong effect, tend to be those for which a change
in income also has a strong effect on desired quantity demanded.
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