Transcript Elasticity

Which items below are price
sensitive/responsive?
Rank the following items on their
price sensitivity/responsiveness?
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Peanut butter
Ipod
Pack of gum
Carton of milk
Air Jordan sneakers
Apple Computer
Filet Mignon
Chipotle burrito
Chevy Corvette
60” Plasma T.V.
Elasticity
•Understand what elasticity is and how it impacts price and quantity of a product
•Explain and apply the 3 determinants of elasticity on real world products
•Analyze the impact of elasticity on consumers
Elasticity
– General measure of responsiveness
– Cause-effect relationship of economics
– Explains how quantity demanded acts when
price changes
• For us, it is how consumers will react to a
change in price by how much they will buy
(all pieces of demand curve)
– Price changing demand
Determinants
1. Can purchase be delayed?
2. Are substitutes available?
3. Does the purchase use a large portion of
income?
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Do remember, there is no baseline for “yes”
or “no”
Need to use your judgment
Watch then Act…
• http://www.youtube.com/watch?v=OiUkGr
sSNuE
• Continue on sheet with the “Case Study:
Netflix vs. Blockbuster” question
• Complete rest of sheet for H.W.