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unit-4-demand-function-and-elasticity

Unit-4 Demand Function and Elasticity

In this unit we will be focussing on the consumer’s demand function for a good .

For the following demand schedule calculate income elasticity when income rises from Rs. 500 to Rs. 600.




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Learning Pundits Content Team

Written on Jun 26, 2019 6:23:12 PM

  • Income elasticity = {20 / (25 + 45)} / { 100 / ( 500 + 600 )} = 3.14 
  • Hence income elasticity is greater than unity, demand is said to be income elastic.