Monopolistic Competition (Cheat Sheet) Updated 4/16/2018
|Elasticity is all about the changes.|
|When Supply decreases the price for Petrol increases by a larger amount that the Quantity Demand,|
There is no close substitute for Petrol, therefore the Demand is Inelastic
|Recognise, that the inelastic section of the curve is at the lower prices, this often causes confusion but it shouldn't,,, |
at low prices a 10% change in the price does' t really affect the amount we buy,, or our quantity demand.
|We can see that with a price increase, quantity demand has changed less|
When you are demand inelastic you just don't react as much to a price change