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To: E. Charters who wrote (70538)	5/28/2001 6:42:44 AM
From: E. Charters	Read Replies (1) \| Respond to of 116756

That should read, "if you take any difference on the quantity scale of an income vs demand-quantity graph (the run) and divide it by the rise of these two difference points (the rise) you get the E or the "income elasticity of demand". E=change in Q (quantity bought) over change in I (disposable income) i.e how sensitive demand is to disposable income changes. You can see that with a flat run over rise, that if income rises a smidgen the run of amount bought changes a lot. Demand increases quickly. Demand has a very sensitive with respect to income in a luxury. Price elasticity would the degree of sensitivity of demand due to price changes. So if disposable income rises, and price rises too, what is the ncome-price elasticity of demand? EC<:-}