When price of commodity Rs 50 Seema demanded 4 Kg but when price became Rs 70 seema demanded 2 so what is income elasticity of demand
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The basic idea of elasticity—how a percentage change in one variable causes a percentage change in another variable—does not just apply to the responsiveness of supply and demand to changes in the price of a product. Recall that quantity demanded (Qd) depends on income, tastes and preferences, population, expectations about future prices, and the prices of related goods. Similarly, quantity supplied (Qs) depends on the cost of production, changes in weather (and natural conditions), new technologies, and government policies. Elasticity can, in principle, be measured for any determinant of supply and demand, not just the price.
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