What Is the Income Elasticity of Demand?

Income elasticity of demand refers to the sensitivity of the quantity demanded for a certain good
to a change in real income of consumers who buy this good, keeping all other things constant.

Income elasticity of demand is an economic measure of how responsive the quantity demand for

a good or service is to a change in income. The formula for calculating income elasticity of
demand is the percent change in quantity demanded divided by the percent change in income.
Income elasticity of demand=percent change in quantity demanded
Percent change in income

What is meant by cross price elasticity of demand?

Cross price elasticity of demand refers to the percentage change in the quantity demanded of a
given product due to the percentage change in the price of another "related" product

The cross elasticity of demand is an economic concept that measures the responsiveness in the
quantity demanded of one good when the price for another good changes. Also called cross-price
elasticity of demand, this measurement is calculated by taking the percentage change in the
quantity demanded of one good and dividing it by the percentage change in the price of the other
good.

Cross-price elasticity of demand=percent change in  Qd  of good  A

Percent change in price of good  B

What Is Price Elasticity of Demand?

Price elasticity of demand is a measurement of the change in consumption of a product in
relation to a change in its price. Expressed mathematically, it is:

Price Elasticity of Demand = % Change in Quantity Demanded

% Change in Price
The price elasticity of demand is an economic indicator of the increase in the quantity of
commodity demands or consumes in relation to its change in price. Economists use price
elasticity to explain how supply or demand changes and understand the workings of the real
economy, despite price changes.

The Management Revolution

Business and society are today in the midst of a revolution comparable to the Industrial
Revolution in both scale and consequences. Today’s revelation has four components: the
globalization of markets, the spread of information technology and computer networks, the
dismantling the traditional managerial hierarchies and the creation of new information economy.
These four components are all occurring quickly and simultaneously and are affected by and
affect another.
Four component of Management Revolution

1.) Establish business/developmental goals at the individual level

 Set “smart” goals—goals that are specific, measurable, achievable, relevant and time-
bound.
 Decsribe success and measurement from both the “what” and the “how” perspective
 Include individual developmental goals to improve role performance and to identify
specific activities or tactics

2.) Provide ongoing coaching and feedback to maximize performance

 When giving feedback, realize it is a gift to move employees toward success

 Be positive and corrective—what’s going well and where is adjustment needed?
 Focus feedback on performance, not personality
 Feedback is owned by the giver using “I” statements; make it theirs
 Continually check for comprehension
 Make feedback timely so that it has maximum impact—act quickly and efficiently
 Take advantage of one-on-one meetings to coach employees
 Can be combined with feedback if related
 Opportunity to check for alignment on “where we’re going”
 Exchange of information and ideas
 Development discussion
 There are three types of coaching conversations: Corrective/Feedback, Problem-
Solving/Planning, and Teaching/Instructive
 Benefits of Coaching: improved engagement, increased motivation, best for retention

3.) Conduct formal reviews and evaluations

 Employee self-assessment
 Feedback of key stakeholders
 Your observations (as manager/superior/etc.): be sure to compare all results to goals set;
share final assessment, evaluation and adjust if needed based on discussion with
employee; and inform employee of reward, if any

4.) Share rewards and recognition

 When it comes to reward and recognition, the definition is up to you

 You must push past any discomfort or insecurity about offering recognition—even giving
something as small as a genuine thank you.
 Think of one time you received recognition for something you did well: What was the
recognition? How did it make you feel? Use your past experience to choose the positive
reinforcement you’ll show to your employee