Question

How do you measure price elasticity and income elasticity of demand?
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Answer 1

Answer:

Key Takeaways

Income elasticity of demand is an economic measure of how responsive the quantity demand for a good or service is to a change in income.

The formula for calculating income elasticity of demand is the percent change in quantity demanded divided by the percent change in income.

Answer 2

Answer:

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Explanation:

Change in demand (∆Q) is the difference between the new demand (Q1) and original demand (Q). Similarly, change in income is the difference between the new income (Y1) and original income (Y). The formula for measuring the income elasticity of demand is same as price elasticity of demand.