Ch+4.3

Ch 4.3 notes and questions

__Elasticity of demand__ __Calculating elasticty__ __Factors affecting elasticity__ > __Elasticity and revenue__
 * elasticity of demand- dictates how drastically buyers will cut back or increase their demand for a good when the prices rises or falls
 * inelastic is demand for a good that you will keep buying despite a price increase
 * elastic is demand in which you buy much less of a good after a small price increase
 * the law of demand implies that the resilt will always be negative
 * unitary elastic if the elasticity is greater than one demand is elastic
 * Several different factors can affect a person's elasticity of demand for a specific good
 * total revenue is defined as the amount of money the company receives by selling its good

Questions #1-4
 * 1) Elasticity of demand is the way people react to changes in price
 * 2) chocolate chips at the beginning of school were $0.75 so kids decided to buy something else instead
 * 3) home fueling is inelastic because we need it to keep warm during the cold
 * 4) Total revenue is calculated by 2 factors the price of goods and the quantity sold