You need to make a distinction between the market elasticity for a good and
the individual elasticity for a good in that market. The market elasticity
for heroin may be very inelastic. The elasticity for heroin sold by you
will likely be much more elastic.
The same is true for many goods. e.g., the demand for airline travel is
much more inelastic than the demand for airline travel on USAir because
there are many more substitutes to travelling on USAir than to simply
traveling by airplane. So it may be that if one airline raises its price,
it will experience a large drop in sales (people will simply fly a different
airline), while if all airlines raise their prices there will be a much
smaller response (because people's only alternatives are train, bus, car,
etc.).
Seth Giertz
-----Original Message-----
From: John Perich [mailto:[EMAIL PROTECTED]]
Sent: Thursday, September 28, 2000 8:13 PM
To: [EMAIL PROTECTED]
Subject: Economics of Love
In a recent discussion I had (off-line), someone described the demand for
heroin (by heroin addicts) as perfectly inelastic. I responded that that
was a bit off; if demand for heroin were perfectly inelastic, I would charge
$1 billion a hit, and inevitably find a buyer. I offered, as a possible
alternative for a good with perfectly inelastic demand, love.
Then I thought - is the demand for love *perfectly inelastic* (meaning,
people desire one quantity, but at any price), or *perfectly elastic*
(meaning, people desire any quantity, but demand will be infinite below a
given price), or something else entirely?
Any ideas?
-JP
_________________________________________________________________________
Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com.
Share information about yourself, create your own public profile at
http://profiles.msn.com.
