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How Supply & Demand Affects Prices. What does it mean to be elastic?. Elastic. When the demand for a good changes in response to change in price. Example. $599.00 July 2007. $399.00 September 2007. $249.99 2010. $$$ Price. Demand. In elastic.
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Elastic When the demand for a good changes in response to change in price. Example $599.00 July 2007 $399.00 September 2007 $249.99 2010 $$$ Price Demand
Inelastic With a partner try and come up with a definition for inelastic. Remember that we are referring to demand. Try and finish the sentence for inelastic. Elastic When the demand for a good changes in response to change in price. Inelastic When the demand for a good … does not change (or changes very little) in response to change in price. $2.50 2007 $3.50 2010
With a partner decide if each example is elastic or inelastic. #1 #2 #3 #4
Elastic or Inelastic With a partner, come up with other examples of projects that are elastic or inelastic.
Normal Goods If your income increased what’s the first thing you would you buy? Finish this sentence with a partner: I would buy a…..
Normal Goods $249.99 This is the projected price for the next 3 years. It’s Christmas time and everyone just received $300 from family. What are you going to buy? You really want this phone, but you don’t have the money. Demand for the phone increases, but the coststays the same.
Inferior Goods Vs. Vs. What is an inferior good? Vs.
Normal & Inferior Goods Turn to your shoulder buddy and make a list of normal vs. inferior examples. Normal Inferior Goods
Substitution Good Which item would you purchase? Why? $2.49 $4.99 If the cost of butter increases, the demand for margarine increases. $3.75 $1.25 If the cost of coffee increases, the demand for tea increases.
Complementary Good It’s July 4th and is having a sale on hot dog buns. What are you going to buy to go with the hot dog buns? Summer 2010, there was a massive recall on peanut butter. People stopped buying peanut butter. What other complementary good would people have stopped buying?