Income Elasticities of Demand
for Various Foodstuffs
The statistics in the table below show the income elasticity of demand for various foodstuffs.
Remember, the income elasticity of demand is:
% change in quantity demanded
% change in income
This means that if the figure is less than 1 (an income-inelastic demand), then a rise in
income will give a smaller percentage rise in the demand for that foodstuff. The lower the
figure, the greater will be the long-term problems for farmers, since the more slowly will their
sales rise.
Foodstuff
Milk
Cheese
Eggs
Cascase meat
Beef
Lamb
Pork
Bread
Butter
Margarine
Income elasticity
of demand
–0.40
0.19
–0.41
–0.01
0.08
–0.21
–0.05
–0.25
–0.04
–0.44
Foodstuff
Sugar and preserves
Cakes and biscuits
Fresh potatoes
Fresh green vegetables
Processed vegetables
Fresh fruit
Fruit juices
Tea
Coffee
All foods
Questions
The demand for coffee (with respect to income)
1. What does it mean when there is a
negative
income
elasticity?
What
implications are there for farmers producing
these foods?
3. What would be the shape of the demand
curve for tea with respect to income?
D
Income
2. The diagram opposite shows a demand
curve for coffee with respect to income.
The curve is inelastic. (Note that coffee
has an income elasticity of 0.23.)
(a) What would be the effect on this
demand curve if there were growing
health worries over the consumption of
coffee?
(b) Why might this make the calculation of
income elasticity of demand difficult?
Income elasticity
of demand
–0.54
0.02
–0.48
0.13
–0.17
0.48
0.94
–0.56
0.23
–0.01
O
Demand (expenditure)