Question

Distinguish Between

Price elasticity of demand and Income elasticity of demand

Answer 1

Sr. No.	Price elasticity	Income elasticity
1.	Price elasticity refers to proportionate or percentage change in quantity demanded of a commodity due to a proportionate or percentage change in its price.	Income elasticity refers to proportionate or percentage change in quantity demanded of a commodity due to the proportionate or percentage change in income.
2.	Price elasticity helps to measure the degree of responsiveness of demand for a commodity to change in its price.	Income elasticity helps to measure the responsiveness of demand for a commodity to change in the consumer's income.
3.	Ed = Prop. change in quantity demanded/ Prop. change in price Ed = %Δ Q/ % ΔP	Ey = Prop. change in quantity demanded /Prop. change in income Ey = %∆Q/ % ∆Y
4.	Five types of price elasticity: Perfectly inelastic Perfectly elastic Unitary elastic Relatively inelastic Relatively elastic	Three types of income elasticity: Zero income elasticity Positive income elasticity Negative income elasticity.