Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 5 - Part II - Elasticity and its Application - Questions for Review - Page 108: 1

Answer

Price elasticity of demand shows the responsiveness of the quantity demanded of a good or service responds to a price change. Income elasticity of demand shows the responsiveness of the quantity demanded of a good or service to an income change.

Work Step by Step

Price elasticity of demand = percentage change in quantity demanded/percentage change in price Income elasticity of demand = percentage change in quantity demanded/ percentage change in income
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