Economics Basics Amount of income available to spend on the good
Introduction
What Is Economics
Scarcity
Macro and Microeconomics
Production Possibility Frontier (PPF)
Opportunity Cost
Specialization and Comparative Advantage
Absolute Advantage
Demand and Supply
The Law of Demand
The Law of Supply
Time and Supply
Supply and Demand Relationship
Equilibrium
Disequilibrium
F. Shifts vs. Movement
Elasticity
The availability of substitutes
Income available to spend on the good

Time
Income Elasticity of Demand
Utility
Monopolies
Oligopolies
Perfect Competition
Conclusion

 

 

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This factor affecting demand elasticity refers to the total a person can spend on a particular good or service. Thus, if the price of a can of Coke goes up from $0.50 to $1 and income stays the same, the income that is available to spend on Coke, which is $2, is

now enough for only two rather than four cans of Coke. In other words, the consumer is forced to reduce his or her demand of Coke. Thus if there is an increase in price and no change in the amount of income available to spend on

the good, there will be an elastic reaction in demand: demand will be sensitive to

a change in price if there is no change in income.

 

 

 

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