5 Discuss the practical application of Price elasticity and Income elasticity of demand. (Practical application of price elasticity, Practical application of Income elasticity)
Answer: – Practical application of price elasticity
- The concepts of elasticity and optimization
Students seem to have great difficulty with understanding the concept of elasticity. In part this perhaps reflects a reliance on the visual concept, for example they have less trouble when get to partial elasticity’s (which of course are very difficult to visualize), but also because of lazy terminology by teachers and lecturers . Too often in their initial introduction to economics students are shown linear demand function that have different slopes and are told that they are examples of elastic or inelastic demand. Hence they look at the slope of the linear demand function and use it to interpret elasticity.
