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For example, a consumer who once purchased a name brand clothing item when earning $40, 000 a year, may need to switch to cheaper brands if they were to have a job paying $30,000 a year. This same consumer may need to forgo purchasing clothing altogether when comparing current income with the cost of essential and non-essential items. According to Theil and Brooks, (1970-1971), “when income increases more and more, this elasticity takes large and large algebraic values”
Retail stores play a vital role in today’s economy. In order to maintain their success, retail stores also have to adjust to price inelasticity and income elasticity for the economy as a whole...
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