Economists use the elasticity of demand in two ways. Sometimes we are talking about the market demand curve, for example the market for automobiles. At other times we are talking about the firm’s demand curve, such as the demand curve for Ford Motors. And sometimes we might even want to talk about the demand for ‘Your Friendly Ford Dealer,’ the one in your neighborhood.
Pick an industry, the one in which you work or the one in which you aspire to work. Using Sal’s scheme for identifying the type of market, is the industry perfectly competitive; monopolistic competitive; an oligopoly; or a monopoly? Is the demand curve for the good or service relatively elastic, unitary elastic, or relatively inelastic?
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Now pick a firm within the industry. Is the firm’s demand curve relatively elastic, unitary elastic, or relatively inelastic? How does elasticity effect the firm’s control over its price?