6-3OtherElasticityConcepts

6-3OtherElasticityConcepts - Other Elasticity Concepts How...

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Other Elasticity Concepts How much of a shift?
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Other Elasticity Concepts Other elasticities can be useful in specifying the effects of a shift factor of demand: Income elasticity of demand. Cross-price elasticity of demand.
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Income Elasticity of Demand Income elasticity of demand – the percentage change in demand divided by the percentage change in income.
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Income Elasticity of Demand Income elasticity of demand tells us the responsiveness of demand to changes in income.
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Income Elasticity of Demand An increase in income generally increases one’s consumption of almost all goods. The increase may be greater for some goods than for others.
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Income Elasticity of Demand Normal goods are those whose consumption increases with an increase in income. They have income elasticities greater than zero.
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Income Elasticity of Demand Normal goods are divided into luxuries and necessities.
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Luxuries are goods that have an income elasticity greater than one.
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This note was uploaded on 01/13/2012 for the course ECON 102 taught by Professor Mikejavanmard during the Fall '10 term at Harvard.

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6-3OtherElasticityConcepts - Other Elasticity Concepts How...

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