4 things that determine elasticity are:
1.necessities Vs. Luxuries
2.Availability of substitutes
3.How much of our income a good takes
4.The passage of time
Inelastic Demand: Quantity doesnt change with a change in price.
Elastic Demand: Quantity changes by a greater percentage than the percentage change in price.
What is more elastic, A BMW or a gallon of milk? A BMW is based on both necessities Vs. luxuries, and how much of income a good takes. Milk is based on Availability of substitutes and necessities Vs. Luxuries. So the more elastic of the two is the milk because as the price goes down the larger the quantity. This doesnt apply to the bmw I think because as the price goes down the quantity goes up but by very little and the quality isnt as good.