Income elasticity is computed by the formula

The formula for income elasticity is:

$$e_i = \frac{{\frac{{{Q_2} – {Q_1}}}{{{Q_1}}}}}{{\frac{{{Y_2} – {Y_1}}}{{{Y_1}}}}}$$

where:

• $e_i$ is income elasticity
• $Q_1$ is the quantity demanded at income level $Y_1$
• $Q_2$ is the quantity demanded at income level $Y_2$
• $Y_1$ is the initial income level
• $Y_2$ is the final income level

Option A is the formula for price elasticity of demand. Option C is the formula for cross-price elasticity of demand. Option D is not a valid formula.