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Consumer and incentives (Demand elasticities (The price elasticity of…

- - - - Budget contrains force consumer to made trade-off.
      - To calculate what is the best feasible option you calculate your opportunity cost = Loss / gain
    - - You buy something that's give you the most satisfaction.
- - - - Acheter un pull en plus ou acheter un jeans et regarde ce qui le rend le mieux pour chaque jeans ou pull en plus.
- - - - Budget share spent on the good
      - Available time to adjust
      - Closeness of substitues
  - - - (1) ED = ∞ - perfectly elastic (highly responsive to price changes)
      - (2) ED > 1 - elastic
      - (3) ED = 1 - unit elastic (1 percent price change affects quantity demanded by exactly 1 percent)
      - (4) ED < 1 - inelastic (not very responsive to price changes)
      - (5) ED = 0 - perfectly inelastic