Econ- Other elasticities

Econ- Other elasticities - Subject: Principles of...

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Subject: Principles of Microeconomics Topic: Demand Elasticities other than Price In addition to price elasticity of demand, economists use other Elasticities to describe the behavior of buyers in a market. The income elasticity of demand The income elasticity of demand measures how the quantity demanded changes as consumer income changes. One can calculate this by the quantity demanded divided by the percentage change in income. % change in quantity demanded/% change in income Economists use this to determine the type of a good. Normal goods are goods that as income increases, the quantity demanded also increases. Because quantity demanded and income moves in the same direction, normal goods have positive income elasticities. There are two types of normal goods however, necessities and luxury goods o Necessities- goods that you have to have regardless of income, like food or clothing.
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Econ- Other elasticities - Subject: Principles of...

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