Elasticity Analysis

Examine this list of consumer goods.

• Salt
• Beef
• Vacation in Costa Rica
• Truffles (a pungent mushroom like thing that looks more like a potato.It grows in the forest, especially in France, and is considered a culinary delicacy.Hunters of it use specially trained pigs or dogs.It is very rare, and therefore very expensive.)
• Dodge Ram Pickup
• Kraft Mayonnaise

Rank these items from most elastic to least elastic in terms of price elasticity of demand and explain your ranking. Things to think about:

How would a 10% price increase for the good affect the consumer's total budget?

• Are there any close substitutes for the good?
• Is the good considered a luxury or a necessity item?

For each good, if the seller wanted to increase total revenue, would you advise him/her to increase price or decrease price, based upon your elasticity assessment above.