Question #304958
Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price when all other influences on buyers’ plans remain the same. Explain the different types of elasticity of demand.
Expert's answer
The different types of elasticity of demand include:
Price elasticity of demand - this is the measure of responsiveness of the quantity demanded of a product to a change in price, with all other factors affecting demand remaining constant.
Income elasticity of demand - this is the measure of responsiveness of the quantity demanded of a good to a change in the buyer's real income.
Cross elasticity of demand - this is a measure of the sensitiveness of the quantity demanded of one good when there is a change in the price of another good. The result obtained will be positive for a substitute and negative for a complementary good.
