Elasticity (November 9th, 2011)

Elasticity is the slope of demand. What impacts elasticity is:

1. Time
2. Budget
3. Substitution

Some people will still buy to the same amount at a higher price because there might not be a substitution for it.
Law of Demand says that over the entire range of prices, it works.
This is a too high price eventually.
Who are all the interested parties? People or businesses.
then why don't we produce changes in the large amounts? Well, because they know that some people will stop. Which has a higher elasticity?

From Minivan to the Red Form Minivan, there are more substitutes. The more narrow the product, the substitutes increases. Demand elasticity in the highest because there are more substitutes.
|n| < 1 is inelastic, people are not sensitive to price.
|n| = 1 unit elastic
|n| > 1 elastic peopel are sensitive to price

Total recipients= P x Q:
if P goes up, Q goes down and vise versa.

In the situation where A has $500 dollars and B has $320 dollars, the consumers are elastic because they are sensitive to price. Expenditures are not the same as costs.