Demand elasticity

 

Assume you have two products – one whose price demand is elastic and the other inelastic with regards to price,…

 Assume you have two products – one whose price demand is elastic and the other inelastic with regards to price, use market diagram to explain how an outward shift of the supply curve of each product might affect their equilibrium price and quantities holding everything else constant. 

 

For which product is the price and quantity effect greater?

Please use supporting graph(s) to also demonstrate equilibrium price and quantity changes under the two different assumptions of price demand elasticity.  You can copy and paste appropriate graphs from the text or use any drawing application such as Powerpoint to draw your graph.

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