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Determinants of the Income Elasticity of the Demand:
The determinants of income elasticity of demand are given below:
Short Run and Long Run criteria:
Short run is the period in which not all factors can adjust fully and thus adjustment to shocks can only be partial.
Long run is the period over which all factors can be changed and full adjustment to shocks can happen.
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Within analysis of perfect competition, we distinguish between the short run and the long run on the basis that use of some input factors is fixed in the short run, but variable in
what is supply and demand
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