Income Elasticity of Demand and types of goods. Income elasticity of demand measures the responsiveness of demand to a change in income. 1  Inferior Good: An inferior good means an increase in income causes a fall in demand.2  It has a negative YED. 3  An example, of an inferior good is Tesco value bread.ncome elasticity of demand measures the responsiveness of demand to a change in income. 1  Inferior Good: An inferior good means an increase in income causes a fall in demand. 2  Normal Good. 3  Luxury Good.