“The income elasticity of demand measures the responsiveness of sales to changes in income, ceteris paribus.” Elaborate upon the concept of income elasticity of demand with the help of an example.

Income elasticity of demand (YED) is a measure used in economics to evaluate how the quantity demanded of a good or service responds to changes in consumer income, holding other factors constant (ceteris paribus). It is an important concept for businesses, policymakers, and economists as it helps understand consumer behavior and forecast market trends based on changes in income.

Understanding Income Elasticity of Demand
Income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income:

\[ \text{YED} = \frac{{\% \text{ change in quantity demanded}}}{{\% \text{ change in income}}} \]

YED can be positive or negative, indicating different relationships between income and demand:

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