Class 29: Elasticity

Today, Mr Rizzo introduces us the idea of elasticity and explain it thoroughly. He gives the example of Rachel and Michael in graph forms. There are a lot of factors that affects the elasticity such as time, budget and the presence of substitutes. The main idea is that when there is more substitutes, there will be more elasticity for the products. Based on the elasticity, we can tell that whether we should increase or decrease the price of that particular products in order to increase the maximum profits earned.