Micro Unit 2.3 CW: Elasticity and Applications (MS)

The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it.

Generally speaking, the demand for luxury goods is more price elastic than is the demand for necessitates.

Generally speaking, the smaller the percentage of one's total budget devoted to a particular product, the more price elastic will be the demand for that product.

If price and total revenue are directly related, it can be concluded that demand is inelastic.

If price changes and total revenue changes in the opposite direction, we can conclude that demand is relatively elastic.