Income Elasticity of Demand
About this model
This diagram models the economic concept of income elasticity of demand within a gaming context, exploring how changes in a player's income influence their spending patterns on different categories of in-game items such as normal goods, luxury items, necessity goods, and inferior goods. Through various sources, pools, and registers, the diagram simulates scenarios where increases in player earnings lead to changes in demand for these item categories, utilizing mathematical formulas to calculate percentage increases in income and demand, as well as the income elasticity of demand itself.
The diagram explicitly categorizes goods by their elasticity—moderate for normal goods, very low for necessity goods, high for luxury goods, and low for inferior goods—offering a practical application of these economic principles in game design. It demonstrates how players' preferences and spending habits shift as their in-game wealth grows, reflecting on real-world consumer behavior. By feeding specific increases in income and demand through registers that calculate the resultant elasticity, the diagram provides insights into how game developers can tailor in-game economies and item availability to player progression and income levels, ensuring a balanced and engaging game environment.
"Income Elasticity of Demand" is a public Machinations diagram shared in the Community by Harry Ashton, with 52 components.
It was created in June 2023 and last edited in June 2023.
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