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DateDate: March 18, 2014: March 18, 2014
TopicTopic: Elasticity of Demand: Elasticity of Demand
AimAim: How do certain factors : How do certain factors determine elasticity of determine elasticity of
demand? demand?
Do NowDo Now: Multiple Choice : Multiple Choice QuestionsQuestions
SOME TEACHERS MIGHT FLIP OUT IF THEY SAW YOU CHEWING GUM…..
SOME TEACHERS MIGHT TURN A BLIND EYE TO THE GUM CHEWING AS LONG AS IT DOESN’T DISRUPT CLASS…
• Elasticity determines if a change in price will affect your demand for the product.
• Elastic Demand with a small price change you will buy much less of a good.
• A consumer with highly elastic demand for a good is very responsive/sensitive to price changes.
• Demand for a good that you will keep buying despite a price increase.
• Inelastic Demand states that a change in price does not affect your demand for the product.
• A consumer with highly inelastic demand for a good is relatively unresponsive to price changes.
THEIR DEMAND FOR MILK IS WHAT?
THEIR DEMAND FOR ICE CREAM IS WHAT?
Milk Vs
Ice Cream
• Few, if any substitutes.• Relatively no change in
quantity demanded no matter what happens to price.
•Many substitutes.•Quantity Demanded is very
responsive to a change in price.
• The demand curve for one good can be affected by a change in the demand for another good.
• Complements:Complements: Two goods that are bought and used together
Example: Skis, Ski boots
• Substitutes:Substitutes: Goods used in place of one another
Example: Ski to Snowboards
SUMMARY:SUMMARY:
How do certain factors determine
elasticity of demand?
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