THE ELASTICITY OF DEMAND

When we introduced demand in Chapter 4, we noted that consumets usually buy more of a good when its price is lower, when their incomes are higher, when the prices of substitutes for the good are higher, or when the prices of complements of the good are lower. Our discussion of demand was qualitative, not quantitative.That is, we discussed the direction in which quantity demanded moves but not the size of the change. To measure how much consumers respond to changes in these variables, economists use the concept of elasticity.