purpose: think about varying degrees of elasticity and factors that determine demand elasticity.

How much would a 10% price increase for the good affect a consumer's total budget? 2. What substitutes are available for the good? 3. Do consumers think of this good as a necessity or a luxury? A typical ranking: 1. European vacation (luxury, many other vacation destinations, expensive) 2. Honda Accord (expensive; many substitutes, including used cars) 3. steak (perceived luxury, moderate expense, other cuts of beef are close substitutes) 4. Dijon mustard (perceived luxury, inexpensive, other types of mustard may be close substitutes) 5. beef (moderate expense, pork and chicken are substitutes) 6. salt (inexpensive, necessity, no close substitutes)