Measuring the Elasticity of Demand for the Consumer Basket Components in Jordan

Abstract

This study aims at measuring the income elasticity of demand based on a survey of the household income and expenditure in the Jordanian economy for the period 2017-2018. And in order to measure the income elasticity of demand, the researchers used the simple linear model However, the researchers anticipated that the increase in the household income would lead to an increase in commodities consumption: in return for the possibility of reducing the consumption, by increasing the price of the commodity. The study reached a set of results, by measuring the income elasticity of demand for 77 types of commodities and services: such as the convergence between the consumer response to the movement of each income and price among the commodities in the Jordanian economy and in other countries, where fresh fish is on the list of luxury commodities among fish and meat. What explains this is the shortage of this commodity offered quantities in the Jordanian market and its high prices. Thus, the presence of very low-income elasticity of ’garlic’ commodity at the level (0.092), which indicates that this commodity cannot be abandoned in case of low income.