Micro Foundations · intro
What moves on the Price Elasticity of Demand & Supply diagram
Fewer substitutes and necessity steepen demand; shocks then hit price hard and quantity little.
Start with ordinary demand.
Now imagine the good is a necessity, insulin, petrol for commuters. Buyers barely respond to price: demand steepens.
Any supply disruption now moves PRICE dramatically and quantity barely at all.
Examiners ask this as: inelastic demand, necessity, addictive, steep demand.
Other scenarios on Price Elasticity of Demand & Supply