Elasticity is when demand is very sensitive to changes in price. The elasticity of a product is based on the avalibility of substitutes, if it is a necessity or a luxury, the time horizon or span, and the share of a consumer’s budget that is spent on the good or service. Zero elasticity price is when a good or service has no buyers at any price. An example of elasticity is when the Rochester school district decided to raise the sport fees. Elasticity can be shown by the slope of a demand curve.

Inelasticity is when the consumer’s response is not fast. An inelastic demand graph has a very steep slope compared to the gradual slope of an elastic demand graph. An example of inelasticity is when the prices of NCAA Final Four shirts drop after the playoffs.


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