What is the difference between price elasticity of demand and elasticity of substitution? Explain the various measures of price ela sticity of demand.
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Conceptually, there is no difference. For there to be elasticity, there must be some sort of substitute, or the ability to simply abstain from the use of the good or service. ... Mathematically, price elasticity shows the deviation in the consumption of a good or service based on a change in price.
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a. income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price.
b. income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.
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