# In Short

Elasticity is how behavior in a market changes in response to a change in price. A demand curve can be described as elastic or inelastic. A supply curve can be described as elastic or inelastic. See post on equilibrium for more on curves.

# Elastic Demand Curve

This is when a small increase (decrease) in the price causes a large decrease (increase) in the quantity demanded. For example: if the local supermarket raises their apple prices by \$1.00, most people will simply buy their apples from another cheaper supermarket. If that supermarket drops their price by a dollar; more people will shop there instead of at other stores.

# Inelastic Demand Curve

This is when a large increase (decrease) in the price causes a small decrease (increase) in the quantity demanded. For example: if a lifesaving medicine is exclusively sold by company A and company A raises the price by 1000%, demand for that product is unlikely to drop for the buyers don’t have a choice. If the company lowers prices, demand is unlikely to increase for anyone who needed the medicine was likely already buying it.

# Elastic Supply Curve

This is when a small increase (decrease) in the price causes a large increase (decrease) in the quantity supplied. For example: An apple seller learns demand for apples has increased due to a famous actor eating an apple in a movie. The market price for apples has thus increased by \$1.00. They will then buy more apples from their supplier in order to fulfill that higher demand. Example 2: That seller learns demand for apples has decreased due to that same actor saying apples are horrible and the market price has dropped by \$1.00. The apple seller will decrease the amount of apples they order from their supplier for they don’t need as many to satisfy the demand.

# Inelastic Supply Curve

This is when a large increase (decrease) in the price causes a small increase (decrease) in the quantity supplied. For example: An apple seller learns demand for apples has increased due to a famous actor eating an apple in a movie. The market price for apples has increased by \$1.00. They are, however, locked into a contract with a supplier who is out of stock. They as a result cannot respond to that higher demand. Example 2: That seller learns demand for apples has decreased due to that same actor saying apples are horrible and the market price has dropped by \$1.00. They are, however, locked into contract with a supplier that states they have to buy at least a certain amount of apples per year. So they can’t decrease the number of apples they order in response to the lower demand.

# Applications of Elasticity

Elasticity informs economists of the effects of various market interventions such as sales taxes, subsidies, etc.

# Fee Structure

 Rate Assets Under Management 1.44% Below \$125,000 1.00% Between \$125,000 and \$750,000 .85% Between \$750,000 and \$1,250,000 .80% Between \$1,250,000 and \$1,750,000 .75% Between \$1,750,000 and \$2,500,000 .70% Between \$2,500,000 and \$3,250,000 .65% Between \$3,250,000 and \$4,250,000 .60% Above \$4,250,000

A single rate is applied to the entire account. So a person with a \$750,000.01 account pays less than a person with a \$750,000 account. I will waive personal tax return fees for accounts over \$1 million. For accounts that are above \$5,250,000, we’ll need to discuss a custom rate.

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