OBJECTIVE: Explain elasticity to a fucking moron in 1 hour.

[Lbelle]

Okay, BIG MICROECONOMICS MIDTERM at 8:20P. I'm severely confused when it comes to a couple areas of the course, but elasticity I just...do NOT get at ALL. I need you to explain it, in the MOST ELEMENTARY WAY POSSIBLE.

I mean seriously, pretend like you're talking to a fucking moron reject that barely speaks English and is from mars. That might be how many of you see me anyway, so it makes it all the easier to explain! But I really need help, and think you guys can explain it better than my SMOKIN NOTES.

Plus, I can bring a note card with me, so add to your explanation anything I should DEFINITELY PUT ON MY CARD.

Thanks in advance.

[Devek]

A non-erect penis is elastic while a fully erect penis is not.

[Keno]

Price elasticity deals with the necessity of an object. The more elastic a good is, the more supply will respond to demand or vice versa; the reverse is true for inelastic goods.

For instance, luxury goods are considered to be very elastic, such that when you slightly raise the price on let's say, a diamond watch, the demand goes down significantly.

Other goods like water, toilet paper, bread, etc. (necessities) are said to be inelastic, because no matter the price they are still needed. These items do not respond drastically to changes in supply or price, as demand is quite constant.

Hope that helped.

[Scythiroth]

I was actually thinking you meant elastic like a rubber band, didn't see the economics part at first lol.

Since I have absolutely no idea what that is, I checked, and its on wikipedia, which I know isn't a GREAT source of info, but its all I have to offer. ._.

http://en.wikipedia.org/wiki/Elasticity_%28economics%29

[Keno]

I was actually thinking you meant elastic like a rubber band, didn't see the economics part at first lol.

Since I have absolutely no idea what that is, I checked, and its on wikipedia, which I know isn't a GREAT source of info, but its all I have to offer. ._.

http://en.wikipedia.org/wiki/Elasticity_%28economics%29

She said simple terms, which is what I provided her

[Scythiroth]

I was actually thinking you meant elastic like a rubber band, didn't see the economics part at first lol.

Since I have absolutely no idea what that is, I checked, and its on wikipedia, which I know isn't a GREAT source of info, but its all I have to offer. ._.

http://en.wikipedia.org/wiki/Elasticity_%28economics%29

She said simple terms, which is what I provided her

Yeah, looking at that link it doesn't look very simple, oops lol.

[Devek]

Don't forget that part of elasticity is how long it takes for the market to find an alternative or learn to deal without the product.

If the price of a music CD triples the demand will instantly go down.

If the price of gasoline triples the demand won't instantly go down because people need to drive places, however over time people will find more fuel efficient means of getting around like car pools and public transit might even be set up if the price was high enough but that could take years to implement.

[Keno]

Yeah I didnt mention this, but elasticity is often also closely linked with the compliments and substitutes of a particular product. Although it's not entirely the same subject.

[Charla]

Keno typed it faster than me. When someone refers to elasticity as a number, they mean the ratio of the price change to the demand change.

* halfassed realworld example time!*

If they drop the price of PS3s from $600 to $450, then Best Buy sells 8 of them per day instead of 3 per day before that. 600-450 = 150, and 150 is 25% of 600. 8-3 = 5, and 5 is 166% of 3. So the change in demand divided by the change in price that caused it would be 166%/25%.

Now would be a good time to mention this is all from memory, and I might have something backwards. Check that wikipidia page or use your book to make sure.

[LinktheDeme]

i actually have an exam on this friday, my econ teacher put review sheets on blackboard ill send through aim if you need.

[Lbelle]

got a little help from this topic indeed, but my exam is now.

can lock if you want Thanks alot though <333

[sephir]

Elasticity is when change in price causes a change in sales.


Inelasticity is when change in price doesnt effect sales.

[aurik]

Keno's description is correct.

Elasticity is how much the sale volume of a good varies with its price. The more elastic a good is, the more that its price affects its sale volume.

Elastic goods are usually luxury goods or goods with alternatives. An example is the cheap blue bic pens. If the price rises 10c, people will stop buying them and instead buy black bic pens or blue papermate pens. What you charge has an extremely large impact on how many you sell.

Inelastic goods are generally necessities, things that people will buy regardless of price. Classic example is perscription medication. No matter how much you charge, people will buy about the same amount.

[Keno]

Keno's description is correct.

Elasticity is how much the sale volume of a good varies with its price. The more elastic a good is, the more that its price affects its sale volume.

Elastic goods are usually luxury goods or goods with alternatives. An example is the cheap blue bic pens. If the price rises 10c, people will stop buying them and instead buy black bic pens or blue papermate pens. What you charge has an extremely large impact on how many you sell.

Inelastic goods are generally necessities, things that people will buy regardless of price. Classic example is perscription medication. No matter how much you charge, people will buy about the same amount.

Actually many prescription meds have close substitutes, like non name-brand crap. But yeah, generally thats correct. The best example of a perfectly (note that when I say perfect, I mean "economically perfect", because no good is truly perfect) inelastic good is water. Can't live without it. Basically everything else either has close substitutes or isn't necessary.

But if they ask on the test for generalities-

Inelastic: Food, water, lodging, power (gas and electricity), gasoline, automobiles (generally, not specific types), etc.

Elastic: Luxury goods, vacation expenses, etc.

As a good rule of thumb, the more specific you get about an item, the more elastic it gets. For example, water may be perfectly inelastic, but then as we narrow it down to bottled water, it is slightly more elastic. Then as we narrow it down to Fiji water, it is much, much more elastic. Then if we narrow it down to cold Fiji water, it is nearly perfectly elastic.

This goes hand in hand with Aurik's pen example.

[Epincus]

Hm, an interesting read.

[RKenshin]

I'm too slow. But yeah Keno/Aurik nailed it, good luck with the test results!

I really dislike both microeconomics and macroeconomics, but this stuff is all burned into my head and I'm stuck taking macro this semester.