1. DEMAND ELASTICITY
DEMAND ELASTICITY: extent to which changes in price cause changes in quantity demanded.

2. DEMAND ELASTICITY
Demand is ELASTIC when a small change in price causes a large change in quantity demanded.
Demand is INELASTIC when a given change in price causes a relatively smaller change in quantity demanded.

3. WHAT DETERMINES ELASTICITY?
Is it a NEED or a LUXURY?
luxury – elastic need – inelastic
Are decent substitutes available?
Yes – elastic, No – inelastic
3. Does the purchase use a large portion of income?
Yes – elastic, No - inelastic

4. Specific Market vs. General Market
Exxon Gasoline vs. Gasoline

5. PREDICT THE DEMAND ELASTICITY
1. Funeral Services 9. Cigarettes
2. Milk (Babies) 10. China (fancy stuff)
3. Fresh tomatoes 11. potatoes
4. Movie tickets 12. drugs(drug addict)
5. Expensive cars 13. electricity
6. Butter gasoline
7. Housing clean water
8. Physician services 16. insulin