This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Price goes up, quantity demanded goes up, TR goes up. Inelasticity: price goes up, TR goes up. Price goes down, TR goes down. UNITARY ELASTIC: % Qd=% P Determinants of elasticity: 1. Availability of substitutes The more the substitutes on the market, the more elasticity. 2. Habit (cigarette and alcohol)/ product loyalty 3. Percent of income spent on good. Must be proportional to the price of a good or service. a. More elasticity if they spend a large amount of their income on the good. 4. Time to adjust, more time to adjust, more price sensitive they become. More time to adjust, more elasticity. 5. As you go from a general area to a specific area, it becomes more elastic because of more substitutes. Inelasticity quiz:...
View Full Document
This note was uploaded on 10/02/2011 for the course ECON 200 taught by Professor Cramer during the Spring '07 term at University of Arizona- Tucson.
- Spring '07