No, it is not possible if there is a price with which you wouldn't buy product because it is just not possible to be able to afford a product at every price (if this was the case, people would charge infinity for products).
The other thing to consider: At some point, there is a substitute for everything.
The example Prof. Rizzo gave us for this was insulin. Is the demand for insulin for diabetics perfectly inelastic- in other words, would they buy insulin at any price.
No, there are substitutes such as having a better diet and exercising more, or even praying to hope that you get better. This might not be a perfect or desirable substitute, but the bottom line is that the substitute does still exist.
This all relates to the demand curve, which states that you want something AND have the ability to get it. At some prices you just can't afford it.
Also think about the health care example: a woman called in the radio show and said that people will pay for health care at all costs. Why is this person's comments wrong? She said we'd do anything for health care. We disprove this when we drive and do other tasks/activities that pose a risk to our lives. If we cared about out health at ALL costs, we all would start doing things that reduce all threats to kills us- like eat healthy, exercise, etc. We all don't do this, so she is wrong.
Then we learned about income elasticity of demand:
% change in qd/% change in Income = Income elasticity of demand
This tells us how much consumption changes when income changes.
Important to note: Income and consumption is different than prices and consumption.
If Income increases and consumption increases, then the product being consumed must be a normal good. If the product being consumed decreases when income increases, must be an inferior good.
If Income decreases and demand for a product decreases, product must be normal good while if vice versa happens, must be a inferior good.
Then we learned another concept: Suppose initial income= 50,000 dollars and initial expenditure on environment= 500 dollars. Let's say Mi = 2 and income increases by 20%. What does that imply for spending on environment? If income goes up 20%, spending on environment increases by 40%
Also, US spends more on health care than other countries--> most of other countries are poorer than us so in comparison, it is the same expenditure on health care because we have more money.
-Cross price elasticity refers to substitutes and complements. When the price of pizza goes up, demand for burritos goes up.
When cross price elasticity is positive, tells us items are substitutes. When it is negative, it tells us they are complements.
Opportunity cost- why are poor people more likely to ride bus than place? It's because it's cheaper for them in terms of opportunity costs. Forget about the monetary price- think about opportunity cost. A wealthier person time might be more valuable so dont want to waste time taking bus.
More people apply to grad school now because of recession- less jobs so giving up less to go to grade school- a 20,000 dollar job as opposed to a 60,000 dollar job.
For something to be a cost, it has to be tied to an action and someone who is bearing the cost.
The costs that matter for producers are opportunity costs.
Why does it cost more to make a bike than a picnic table?
- The price of all the stuff going in to the mountain bike costs more than that of a picnic table
- also, the skills necessary to make a bike are more scarce and therefore those workers are more desirable at a higher price.
Skilled workers are paid more than unskilled workers only if there are more opportunities from other people to have his skills employed than unskilled person.
Quantity supplied= the amount of a good that firms are willing and able to produce at a particular price.
Law of supply= holding all else constant, when price of a good rises, firms will produce of that product.
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