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Define And Explain The Concept
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Price elasticity of demand is defined as how demand changes as a result of a change in price. It can be said that if a reduction in price leads to an increase in demand then demand is relatively elastic. Elasticity
is usually negative. There is an alternative scenario where demand will increase as ....
Middle of essay
....s. The longer the time after a price change, then, the more elastic is demand likely to be.
Income elasticity is a measure of responsiveness of the demand to a change in incomes. Income elasticity is important to firms considering the future market for their product. If the product has a high income elasticity of demand then sales are likely to expand rapidly as national income goes up, but also fall quickly should the economy move into recession. The formula for income elasticity of demand is:
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| Number of words: 1339 |
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