Unit 1 Notes (1/13/15)

• Elasticity Demand: Drastically how buyers will but back when price rises or falls. 

• Elastic Demand: Demand for product that will change regardless of price. E>1 

Ex.- "Wants", movie tickets, steak, fur coats.

• Inelastic Demand: Demand for product that will not change regardless of price. E<1

Ex.- "Needs", milk, salt, gasoline, medicine (insulin)

• Unit Elastic: E=1

Elasticity Equations Steps:

1.) New Quantity- Old Quantity/ Old Quantity
2.) New Price- Old Price/ Old Price
3.) % Change in Quantity (take absolute value)/ % Change in Price