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February 7 Notes
How would the following change demand?
- Increase in price of good
- Increase in household income and demand for good
- Demand for good after negative news about a substitute good is spread
- Expected price increase in good
- increase (but will decrease after the price increases)
- Reduction in price of substitute good
- decrease (but increase for the substitute)
- Increase in price of compliment good
What makes demand more or less elastic?
- Necessities vs Luxuries
- Share of income spent on good (it’s worth less to you if you’re rich)
- Time (waiting = elastic)
- Who pays