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Business
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| Number of pages / Number of words: |
5 / 1352 |
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Values less than one are inelastic. This means price and revenue are directly related. As one unit increases so does the other. If elasticity equals one, then quantity demanded and price move the same amount proportionately.
Income elasticity “measures the degree to which consumers respond to a change in their incomes by buying more or less of a particular good†(McConnell & Brue, 2004, p...
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If elasticity equals one, then quantity demanded and price move the same amount proportionately.
Income elasticity “measures the degree to which consumers respond to a change in their incomes by buying more or less of a particular good†(McConnell & Brue, 2004, p. 48).The formula to calculate income elasticity of demand is as followed:
Positive income elasticity is a normal good meaning more quantity of goods are demanded as individuals income rise...
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