By the end of this chapter, you should understand:

1. how elasticities measure responsiveness of demand or supply
2. the price elasticity of demand
3. how it affects the revenue effect of a price change
4. why bad harvests may help farmers
5. the fallacy of composition
6. how cross-price elasticity relates to complements and substitute
7. income elasticity of demand
8. inferior, normal, and luxury goods
9. elasticity of supply
10. how supply and demand elasticities affect tax incidence