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Elasticity

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Elasticity

OF

DEMAND

WHAT WILL CONSUMERS DO WHEN PRICES CHANGE???How much more will consumers buy if the price falls?How much less will consumers buy if the price rises?

ELASTIC:

Buyers are responsive to price changes

INELASTIC:

Buyers are not responsive to price changes

- Availability of substitutes
- Price relative to income
- Necessities vs. Luxuries
- Time needed to adjust to a price change

- Sugar
- New furniture
- New car
- Gasoline
- Food
- Encyclopedia

- 2% Milk
- Sailboat
- Socks
- Aspirin
- Diet Coke
- Gold Jewelry
- Insulin