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?