Question

Using real world example, evaluate the importance to producers of price elasticity of demand and income elasticity of demand.

Answer 1

Answer:

Demand elasticity is an economic measure of the sensitivity of demand relative to a change in another variable. The quantity demanded of a good or service depends on multiple factors, such as price, income and preference. Whenever there is a change in these variables, it causes a change in the quantity demanded of the good or service. For example, when there is a relationship between the change in the quantity demanded and the price of a good or service, the elasticity is known as price elasticity of demand.

There are still two other main types of demand elasticity, which are income elasticity of demand and cross elasticity of demand.

Explanation:

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Answer 2

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Demand elasticity is an economic measure of the sensitivity of demand relative to a change in another variable. The quantity demanded of a good or service depends on multiple factors, such as price, income and preference. Whenever there is a change in these variables, it causes a change in the quantity demanded of the good or service. For example, when there is a relationship between the change in the quantity demanded and the price of a good or service, the elasticity is known as price elasticity of demand.

There are still two other main types of demand elasticity, which are income elasticity of demand and cross elasticity of demand.