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Sometimes lowering the price of the commodity increases sales sufficiently to increase total revenues. Thus price elasticity of demand is given by percentage change in quantity demanded to percentage change in price, holding all other variables constant.
Ep = ?Q/Q
?P/P
Price elasticity of demand depends on
1. Availability of substitutes
2. Length of time over which the quantity response to price change is measured
Income Elasticity Of Demand ( EI )
The level of consumer’s income is also very important determinant of demand. Income elasticity measures responsiveness of demand to change in income...
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