If, for example, based on data from 8PS compiled from markets in 2012 - 2015, tAe average demand for X and Z products is as follows:  Year Income ( IDR 000) Demand X Demand Z 2012 2000 40 80 2013 2200 30 10 2014 2420 28 110 2015 5000 27 114  Count A

Computation of Income Elasticity of Demand:

Income Elasticity of Demand = % Change in Demand/% Change in Income

1) Income Elasticity of Demand for Goods X and Z in 2013:

For Good X:

Income Elasticity of Demand = ((30-40)/40)/((2200-2000)/2000) = -2.5

For Good Z:

Income Elasticity of Demand = ((90-80)/80)/((2200-2000)/2000) = 1.25

2) Income Elasticity of Demand for Goods X and Z in 2014:

For Good X:

Income Elasticity of Demand = ((28-30)/30)/((2420-2200)/2200) = -0.67

For Good Z:

Income Elasticity of Demand = ((110-90)/90)/((2420-2200)/2200) = 0.45

3) Income Elasticity of Demand for Goods X and Z in 2015:

For Good X:

Income Elasticity of Demand = ((27-28)/28)/((5000-2420)/2420) = -0.033

For Good Z:

Income Elasticity of Demand = ((114-110)/110)/((5000-2420)/2420) = 0.034