elasticity, which is the degree to which consumers and producers change their demand and supply in response to changes in price or income. The demand for some products shows less change than for other products if price changes, and similarly some products can show higher changes in supply than others in reaction to changes in price.

• Elastic demand: Describe a product you or your family purchase with some regularity that even a small increase in price might cause you to reduce your demand for it. Why is this product elastic? Remember: elastic demand is often associated with items that are: a) not necessities; b) products with lots of substitute goods; c) bought more frequently. (5 points)

• Inelastic demand: Describe a product you or your family use or purchase that you would likely consume at the same rate even with a significant price increase. Why is this product inelastic? Remember: inelastic demand is often associated with items that are: a) necessities; b) products with zero or few substitute goods; c) bought less frequently. (5 points)

Every day we are faced with all sorts of different types of incentives. An incentive is something that motivates a producer or consumer to follow a course of action or to change behaviors. In the lesson we discussed four types of invectives: financial, moral, natural, and coercive.

• Discuss an example from your own experience of a time that you acted a certain way due to a financial incentive. What was the incentive, and why was this incentive enough to cause you to act in a certain way? (5 points)

• Discuss an example from your own experience of a time that you acted a certain way due to a moral, natural, or coercive incentive. What was the incentive, and why was did this incentive cause you to act in a certain way? (5 points)