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Share of Income Spent on the Good

Published on Nov 18, 2015

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MORE DECKS TO EXPLORE

PRESENTATION OUTLINE

1.

ELASTICITY

  • Something takes up a large share of your income
  • You're more likely to respond to a change in price
  • Example: House
2.

INELASTICITY

  • Something takes up a small share of your income
  • You're less likely to care about a price change
  • Example: Eggs
3.

REAL WORLD EXAMPLE

  • Cars are a large share of an income
  • They are more elastic
  • More expensive car=Bigger response to price change
  • BMW 700 Series elasticity = 4.4, Pontiac Grand Am elasticity = 1.8
  • Group members: Jacob, Connor, Jason, Grace, Nick

Jacob Letwat