Here is some info on elasticity:
http://www.reffonomics.com/elasticity1.html (animated gif file)
http://apecon.us/tanstaafl_files/ (38 minute video file, a lecture from another teacher)
http://hspm.sph.sc.edu/COURSES/ECON/Elast/Elast.html (interactive tutorial)
Some questions for thought:
1. When would you want to own a business that sells price-elastic products? Why?
2. The rent for apartments in New York City has been rising sharply. Demand for apartments in New York City has also been rising sharply. This is hard to explain, because the law of demand says that higher prices should lead to lower quantity demanded. Do you agree or disagree? (and, as always, explain)
3. Taxicab fares in most cities are regulated. Several years ago, cab drivers in Boston obtained permission to raise their fares 10%, and they anticipated that revenues would increase by about 10% as a result. They were disappointed, however. When the commissioner granted the 10% increase, revenues increased by only about 5%. What can you infer about the elasticity of demand for taxicab drivers? What were cab drivers assuming about the elasticity of demand? (You may not be able to answer this one without looking up other ways to determine elasticity in your book) :)