Income elasticity refers to the measure of how responsive the demand for a particular good or service is to changes in income levels. It is a measure of the relationship between changes in income and changes in the quantity of a product or service that consumers are willing and able to purchase. A high income elasticity indicates that the demand for a product or service is highly sensitive to changes in income, while a low income elasticity suggests that the demand is relatively unaffected by changes in income. This concept is important in understanding consumer behavior and market trends, as it can provide insights into how changes in income levels may impact the demand for certain goods and services.