Price elasticity of demand refers to the degree to which the quantity demanded of a good or service changes in response to a change in its price. Income elasticity of demand, on the other hand, refers to the degree to which the quantity demanded of a good or service changes in response to a change in consumers' income.
There are several key differences between price elasticity and income elasticity of demand.
First, price elasticity of demand is directly related to the price of a good or service, while income elasticity of demand is related to the income of consumers. This means that a change in the price of a good or service will affect the quantity demanded, but a change in income will not necessarily affect the price of a good or service.
Second, the elasticity of demand for a good or service can vary depending on its price and income elasticities. For example, a good or service with a high price elasticity of demand will see a larger change in the quantity demanded in response to a change in price, while a good or service with a low price elasticity of demand will see a smaller change in the quantity demanded in response to a change in price. Similarly, a good or service with a high income elasticity of demand will see a larger change in the quantity demanded in response to a change in income, while a good or service with a low income elasticity of demand will see a smaller change in the quantity demanded in response to a change in income.
Third, price elasticity and income elasticity of demand can also be affected by the availability of substitutes for a good or service. For example, if there are many substitutes available for a particular good or service, it is likely to have a higher price elasticity of demand, as consumers can easily switch to one of the substitutes if the price of the good or service increases. Similarly, if there are few substitutes available for a particular good or service, it is likely to have a lower price elasticity of demand, as consumers are less likely to switch to a substitute if the price of the good or service increases.
In summary, price elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in its price, while income elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in consumers' income. Both elasticities can be affected by the availability of substitutes and the price and income elasticities of a good or service can vary depending on the characteristics of the good or service.