FREE TRIP TO ST. THOMAS ISLAND FOR TWO!!!! CONDITIONS 1.None 2.No eating out until Spring Break 3.Above and no t.v. until S.B. 4.Above and working in my room 1hour per week until S.B. 5.Above and no cell phone until S.B. 6.Above and must be in by 9:00 every night until S.B. 7.Above and turn in i-pod or MP3 player until S.B. 8.Above and no driving until S.B.

WHAT CONDITIONS MUST ONE MEET TO BE CONSIDERED IN THE DEMAND FOR A GOOD OR SERVICE? 1.MUST HAVE THE DESIRE FOR THE ITEM AND…. 2.HAVE THE ABILITY TO PAY FOR IT

ELASTIC OR INELASTIC? Inelastic Elastic Inelastic ? elastic ? Milk MP3 players Plastic surgery Air conditioning Cocaine Coffee College education Gasoline Gas at your favorite station Cigarettes High speed internet

Elasticity of Demand I f your boss increases your pay from $6 per hour to $7 per hour, how much is your raise as a percent? Difference between the 2 #’s Divided by the original # x 100 1/6 x100 = 16.6% (not bad) Elasticity = % change in QD % change in price An elasticity greater than 1 = elastic An elasticity less than 1 = inelastic An elasticity equal to 1 = unit elastic

Example A car wash raises its price from $10 to $11. As a result, the number of daily customers falls from 60 to 48. What is this service’s elasticity? % change in QD = x100 = 20% % change in price = 1/10 x100 = 10% 20/10 = 2 (the service is elastic)