ECON 101 Lecture Notes - Lecture 7: Demand Curve, Little Caesars, Longrun
Document Summary
Determinants of elasticity of demand and supply, and the 2nd laws of demand and supply. The better the substitutes, the more elastic the demand (higher | ed |). If there is a price increase for a good, and that good has a number of good substitutes, we would expect many consumers to switch to substitutes, resulting in a large change in the quantity demanded of the good. Thus, more substitutes lead to a more elastic demand curve. There are lots of substitutes for peppino"s pizza columbo"s little caesars, hamburgers, chicken. There are fewer substitutes for pizza in general hamburgers, chicken. There are few substitutes for food in general. Thus peppino"s will have the most elastic demand curve, with food having the least elastic demand curve (most inelastic demand curve). | epeppino"s pizza | > | epizza | > | efood |