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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.
In the analysis of the aggregate market, the price level generally changes in response to a disequilibrium in the economy. The change in the price level then leads to changes in aggregate expenditures and a movement along the aggregate demand curve, which is the mechanism that restores equilibrium.The key is that price level changes CAUSE movements along the aggregate demand curve.n the analysis of the aggregate market, the price level generally changes in response to a disequilibrium in the economy. The change in the price level then leads to changes in aggregate expenditures and a movement along the aggregate demand curve, which is the mechanism that restores equilibrium.