ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Income elasticity of demand refers to the sensitivity of the quantity demanded for a certain good to a change in the real income of consumers who buy this good. The formula for calculating income elasticity of demand is the percent change in quantity demanded divided by the percent change in income.

Detailed explanation-2: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.

Detailed explanation-3: -2). The Income Elasticity of Demand, commonly known as YED, refers to the sensitivity of the quantity requested for a certain commodity to changes in real income (the income generated by a person after accounting for inflation) of the consumers who buy this good, while all other variables remain constant.

Detailed explanation-4: -Price elasticity is the ratio between the percentage change in the quantity demanded, or supplied and the corresponding percent change in price. The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price.

Detailed explanation-5: -Income elasticity of demand or YED is referred to as the corresponding change in the demand of a product in response to the change in a consumer’s income. It can also be defined as the ratio of change in the quantity demanded by the change in the customer’s income.