### INCOME ELASTICITY CROSS ELASTICITY

 16.     income elasticity cross elasticity 1.      Meaning: - Income elasticity of demand (Ey) is the proportionate change in quantity demanded of a commodity to given change in consumer’s income. 2.      Formula Income elasticity of demand = Relative change in Demand for a commodity Relative change in consumer’s income              3.      Responsiveness Income elasticity of demand shows the degree of responsiveness of quantity demanded of a commodity to a given change in consumer’s income. Cross elasticity of demand is the proportionate change in the quantity demanded of a commodity to given change in the price of its substitutes. Crosselasticity of demand = Relative change in Demand for X Relative change in price of Y                      (Y is substitute of X) Cross elasticity of demand shows the degree of responsiveness of quantity demanded of a commodity to a given change in the price of its substitutes.