Income elasticity measures how the quantity demanded of a good changes in response to a change in consumer income. It is calculated by dividing the percentage change in quantity demanded by the percentage change in income. A positive income elasticity indicates that the good is a normal good, meaning demand increases as income rises, while a negative value suggests it is an inferior good, where demand decreases as income increases. For example, luxury items like designer handbags typically have high positive income elasticity, as people buy more when they have higher incomes. In contrast, basic necessities like bread may have low income elasticity, as demand remains relatively stable regardless of income changes.