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The Law of Demand and Elasticity
- The law of demand states that we buy more when prices are lower and less when prices are higher.
- Elasticity quantifies this change, exploring how much more or less we buy given a price change.
Substitutes and Elasticity
- Substitute goods are key to understanding elasticity.
- The presence of good substitutes increases the elasticity of demand for a product.
Daraprim Price Hike
- Martin Shkreli drastically increased the price of the life-saving drug Daraprim.
- This case exemplifies inelastic demand where a lack of substitutes empowers sellers.