B.  Demand Elasticities

• Measures responsiveness of buyers to changes in various factors

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1.  Price elasticity of demand

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a. Calculation

(1)  Arc price elasticity

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(2)  Point price elasticity

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b. Categorizing goods

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c. Factors affecting the price elasticity

(1)  Number of substitute goods

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(2)  Percent of consumer's income spent on product

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(3)  Time period

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(4)  Brand-level vs. industry-level

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d. Elasticity and the demand curve

(1)  Linear demand

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(2)  Extreme cases

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e.  Elasticity and revenue

(1)  Elastic demand

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(2)  Inelastic demand

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(3) Marginal revenue

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(4) Total revenue function

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2.  Income elasticity

a.  Calculation

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b.  Categorizing goods

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3.  Cross-price elasticity

a.  Calculation

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b.  Categorizing goods

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