If price increases short term it is inelastic since

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IF PRICE INCREASES SHORT TERM IT IS INELASTIC SINCE WE CANNOT FIND SUBS QUICKLY - IF PRICE INCREASES LONG TERM IT IS INELASTIC SINCE WE HAVE MORE TIME TO FIND SUBS BUDGET SHARE - Large share is elastic (buying car) we do care, we will wait or get more money - Small share share is inelastic (buying gasoline) we do not really care LUXURIES vs NECESSITIES - Luxury is elastic - Necessities is inelastic - Durable goods are elastic
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- Non durable goods are inelastic, we need them now before they go bad CROSS ELASTICITY DEMAND - Measure of response of the quantity of one good demanded to a change in the price of another good - CHANGE IN QUANTITY DEMANDED OF ONE GOOD/CHANGE IN PRICE OF OTHER GOOD IF GOODS ARE SUBSTITUTES THEN CROSS-PRICE ELASTICITY IS POSITIVE IF GOODS ARE COMPLEMENTS THEN CROSS-PRICE ELASTICITY IS NEGATIVE INCOME ELASTICITY DEMAND - Measure of the responsiveness of demand to changes in income - CHANGE IN QD OF ONE GOOD/CHANGE IN INCOME PRICE ELASTICITY OF SUPPLY - Measure of response of quantity of a goods supply - CHANGE IN QD/ CHANGE IN PRICE
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