Formulas for Income Elasticity of Demand & Cross Elasticity of Demand

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\[\frac{\[\frac{(Change in Q)}{.5(Q1 + Q2)}\]}{\[\frac{(Change in Y)}{.5(Q1 + Q2)}\]}\]

Where:

Change in Q = Difference between the original quantity demanded and the new quantity demanded

Change in Y = Difference between the original income and the new income

Q1 = Original quantity demanded

Q2 = New quantity demanded

Y1 = Original income

Y2 = New income This formula can be simplified to:

(Change in Q) X (Y1 + Y2)

(Change in Y) (Q1 + Q2)

Formula for Calculating YED

Formula for Calculating YED

\[\frac{\[\frac{(Change in Q(X))}{.5(Q1(X) + Q2)}\]}{\[\frac{(Change in P(Y))}{.5(P1(Y) + P2(Y))}\]}\]

Where:

Change in Q(X) = Difference between the original quantity demanded of Good X and the new quantity demanded of Good X

Change in P(Y) = Difference between the original price of good Y and the new price of good Y

Q1(X) = Original quantity demanded of good X

Q2(X) = New quantity demanded of good X

P1(Y) = Original price of good Y

P2(Y) = New price of good Y

Calculating YED

Calculating CED