percentage change of a related variable that we can apply to many economic connections. For instance, the

income elasticity of demand is the percentage change in quantity demanded divided by the percentage change
in income. The cross-price elasticity of demand is the percentage change in the quantity demanded of a good

divided by the percentage change in the price of another good. Elasticity applies in labor markets and financial

capital markets just as it does in markets for goods and services. The wage elasticity of labor supply is the

percentage change in the quantity of hours supplied divided by the percentage change in the wage. The

elasticity of savings with respect to interest rates is the percentage change in the quantity of savings divided by

the percentage change in interest rates.

Self-Check Questions

1. From the data in Table 5.5 about demand for smart phones, calculate the price elasticity of demand from:
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