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Price Point Impact. Even with a linear demand curve, price elasticity for any product. (including tobacco) varies as the price for that product varies. De-. mand tends to be relatively inelastic at lower price levels (due to. smaller income effects), but grows more elastic as price increases.
Price levels provide a snapshot of prices at a given time, making it possible to review changes in the broad price level over time. As prices rise (inflation), or fall (deflation), consumer demand for goods is also affected, which leads broad production measures like gross domestic product (GDP) higher or lower.f price levels begin to rise too quickly, central bankers or governments will look to decrease the money supply or otherwise decrease the aggregate demand for goods and services.