[Anonymous]

Hello, in the Roger CPA book it states that you can use the ARC Method for supply and demand instead of learning all the different equations. Does this apply to everything that has to deal with supply and demand? Such as Income Elasticity of Demand?

[Anonymous]

If you understand the graphs, no need to memorize equations.

For most any Demand/Supply graph, anything dealing with price move along the curve.

Factors such as consumer taste, income etc… for price/quantity point shift the graph to the left or right of that point ( think of a coordinate (x,y). Price is the only thing where you move on the curve itself.

Price elasticity is percentage change in Quantity Demanded/Percentage change in price. So if something is very price elastic a slight change in price will cause a huge change in the demand.

Something that is relatively price inelastic, a big change in price will not cause demand to matter much. Think of lottery tickets, alcohol and cogarettes..That is why they can tax the hell out of it and people still buy it.

[Author]

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