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Unformatted text preview: 1. Substitutes Demand for salt is very inelastic i. Not many substitutes ii. Low part of income 2. % income Large % of income more elastic i. Ex: Apartments Smaller % of income more inelastic i. Raising the price of gum a couple cents 3. Luxury vs. Necessity Necessities (things you must have) more inelastic Luxuries (things you don’t need) more elastic i. Prices go up on jewelry…. people stop buying jewelry because you do not have to have jewelry 4. Time...
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- Winter '08
- Supply And Demand, excess demand Inelastic, inelastic Elastic