Economics Elasticity Of Supply Questions
The difference between income elasticity of supply and income elasticity of demand lies in the perspective from which they are analyzed.
Income elasticity of supply measures the responsiveness of the quantity supplied of a good or service to changes in income. It indicates how much the quantity supplied changes in response to a change in income. A positive income elasticity of supply suggests that as income increases, the quantity supplied also increases, while a negative income elasticity of supply indicates that as income increases, the quantity supplied decreases.
On the other hand, income elasticity of demand measures the responsiveness of the quantity demanded of a good or service to changes in income. It indicates how much the quantity demanded changes in response to a change in income. A positive income elasticity of demand suggests that as income increases, the quantity demanded also increases, while a negative income elasticity of demand indicates that as income increases, the quantity demanded decreases.
In summary, income elasticity of supply focuses on the relationship between income and the quantity supplied, while income elasticity of demand focuses on the relationship between income and the quantity demanded.