Summary

For many practical applications, we need to know about the numerical characteristics of demand and supply for various goods and services. The most important of these is the price elasticity of demand:

Other key elasticity measures are

the income elasticity of demand
the cross price elasticity of demand
the elasticity of supply

All are computed in a similar way -- as the quotient of percent changes in the variables, ceteris paribus -- and thus are independent of the units of measurement. We have seen that all have important roles in explaining economic events.

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