Chapter 5

Where supply and demand seemed like an oversimplified way of measuring changes in market conditions, elasticity, which takes into account the magnitude of effects on the market, is a portal to a greater understanding of how the market really works. The key to understanding this chapter is to know the difference between elastic and inelastic goods, the former responding substantially to changes in price, and the latter responding only slightly to price changes. The factor of elasticity I found the most interesting was how the definition of the market had such a big impact on elasticity. The tighter the definition, the easier it is to find a substitute good. The toughest concept to remember is the difference between the five types of elastic/inelastic demand. I also enjoyed Mankiw breaking the fourth wall and talking directly to the reader about a trick to use on the next exam, very creative. I still need some time for the concepts to sink in though, it's a little more advanced than the last chapter. I'd rate this chapter a 2/3 in terms of difficulty, not too hard to understand.