16. income
elasticity
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cross elasticity
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1.
Meaning: -
Income
elasticity of demand (Ey) is the proportionate change in quantity demanded of
a commodity to given change in consumer’s income.
2.
Formula
Income elasticity of demand =
Relative change in Demand for a commodity
Relative change in consumer’s income
3.
Responsiveness
Income
elasticity of demand shows the degree of responsiveness of quantity demanded
of a commodity to a given change in consumer’s income.
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Cross elasticity of demand is the
proportionate change in the quantity demanded of a commodity to given change
in the price of its substitutes.
Crosselasticity of demand =
Relative change in Demand for X
Relative change in price of Y
(Y is substitute of X)
Cross
elasticity of demand shows the degree of responsiveness of quantity demanded
of a commodity to a given change in the price of its substitutes.
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INCOME ELASTICITY CROSS ELASTICITY
