Income elasticity of demand

After Covid-19


While Covid-19 has shut the world economies down, destroying trillions of wealth in the process, knowledge of income elasticity can help us answer the question; what next? What will the next twelve to eighteen months look like?

We know that national income has decreased? Similarly GDP per capita? The world may face as bad as a depression, pull back in growth for sure over the next two quarters...so a recession for sure.

So what should companies do? Should companies such as Apple roll out their next generation of products? What adjustments should companies such as Toyota make in their product offering? Should they change the production ratio of the vehicles they produce high end (luxury type) versus their more inferior brand.

What should countries such as Canada do? As national incomes are falling due to Covid-19, what impact will this have on Canada's export revenue?

For the Canadian businessman, what pockets of opportunities may exists for foreign direct investments? Should they look for opportunities in Less Developed countries or in Developed countries. We know that income elasticities vary between high and low income groups and more significantly between high and low income countries. How is this information useful to the decision maker?

From the government perspective, how might covid-19 influence the income gap in Canada? In the short term, medium term and long term?