1. Demand Elasticity:
Chapter 4
Section 3

2. Elasticity measures how sensitive consumers are to price changes.

3. Elastic- when a change in price causes a large change in demand.

4. Inelastic -when a change in price causes a small change in demand.

5. Unit elastic when a change in price causes a proportional change in demand.

7. Demand is elastic if the answer to the following questions are “yes.”
1. Can the purchase be delayed?
2. Are adequate substitutions available?
3. Does the purchase use a large portion of income?