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?. ELASTICITY OF DEMAND : Measurement of consumers’ sensitivity to price. ELASTIC :

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Elasticity

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Elasticity

Elasticity

OF

DEMAND


Elasticity

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?


Elasticity of demand measurement of consumers sensitivity to price

ELASTICITY OF DEMAND:Measurement of consumers’ sensitivity to price

ELASTIC:

Buyers are responsive to price changes

INELASTIC:

Buyers are not responsive to price changes


Determinants of demand elasticity

Determinants of Demand Elasticity:

  • Availability of substitutes

  • Price relative to income

  • Necessities vs. Luxuries

  • Time needed to adjust to a price change


Elastic or inelastic

Elastic or Inelastic?

  • Sugar

  • New furniture

  • New car

  • Gasoline

  • Food

  • Encyclopedia

  • 2% Milk

  • Sailboat

  • Socks

  • Aspirin

  • Diet Coke

  • Gold Jewelry

  • Insulin


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