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Elasticity

Elasticity. If a product changes its price, we expect there will be a change in the quantity demanded The degree of change is the elasticity of the product. Elastic: if price changes only a little, and quantity demanded changes a lot

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Elasticity

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  1. Elasticity

  2. If a product changes its price, we expect there will be a change in the quantity demanded • The degree of change is the elasticity of the product

  3. Elastic: if price changes only a little, and quantity demanded changes a lot • Inelastic: if price changes and the quantity demanded does not change • What are items that are elastic in demand and inelastic in demand?

  4. Utility • Usefulness or satisfaction that people get from a good or service • The utility of a product will determine the elasticity

  5. Diminishing Marginal Utility • With each use of the good/service, the degree of satisfaction gained (utility) from the good/service will gradually lessen

  6. Inferior products • Products one buys less of when income rises • What are some inferior products as you grow up and make more money?

  7. Elasticity of Supply • Changes in price offered by market will affect the amount of goods produced by businesses

  8. Depends on how easy it is to make more of the product

  9. If quantity can change easily, it is elastic • If quantity cannot change easily, it is inelastic

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