Microeconomics › Section E · Elasticity › Topic E.4
Income, cross-price, and other elasticities
Quantity responds to more than a good's own price: it responds to buyers' incomes, to the prices of other goods, and on the supply side to everything that makes production flexible. The elasticity formula stretches to measure each of these - and the sign of the answer often carries the whole finding.
In this topic
- One formula, a family of questions
- Income elasticity of demand
- Putting income elasticity to work
- Worked example: reading two income elasticities
- Cross-price elasticity
- Worked example: two cross-price readings
- Elasticity in competition law
- Supply elasticity, revisited in full
- Elasticity in labour and savings markets
- Why low elasticities attract tax designers
- Common mistakes to avoid
- Key takeaways
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