Chapter 5: Elasticity and its Application

The demand for tyres should be more inelastic than the demand for Michelin brand tyres.

The demand for a necessity such as petrol tends to be elastic.

If a small %- increase in the price of a good greatly reduces the quantity demanded , the demand for that good is

In general, a flatter demand curve is more likely to be

The income elasticity of demand for luxury items, such as diamonds, tends to be large (greater than 1)

If the demand for a good is price inelastic, an increase in its price will increase total revenue in that market.

In general, a steeper supply curve is more likely to be