1. What is income elasticity of demand and how is it calculated?

2. How do income inelastic and income elastic demand differ in their responsiveness to income changes?

1. What are the four types of income elasticity of demand and how does each respond to income changes?

1. How do normal goods and inferior goods differ in their relationship to income changes?

2. What are examples of inferior goods and why does demand for them decrease as income rises?

1. How do necessities and luxuries differ in their income elasticity and how consumers respond to income changes?

2. Why do necessities have income elasticity between 0 and 1, and what does this mean for consumer spending?

1. Why is the cross-price elasticity of demand positive for substitute goods?

2. How do you calculate cross-price elasticity of demand for substitutes and what does a positive ratio indicate?

1. What are complementary goods and why is their cross-price elasticity of demand negative?

2. How does the cross-price elasticity calculation differ between complementary goods and substitutes?

1. How can businesses use cross-price elasticity to make pricing decisions for substitute products?

2. Why must companies producing complementary goods consider cross-price elasticity before raising prices?