If the quantity supplied by producers is relatively insensitive to price changes, supply is price inelastic.
Inelastic demand is demand for which the change in quantity demanded is small due to changes in price. Demand is elastic if the formula yields an absolute value greater than 1. In other words, quantity changes faster than price. If the value is less than 1, demand is inelastic.
For example, consumers are less price relatively insensitive if the product or service is unique or has few alternatives. Consumers are less price sensitive when total costs are low relative to total revenues. The total effort compared to the total cost of the final product also influences price sensitivity.
The figure is arrived by calculating the future of the yearly total service of $600($3*200) by using applicable annuity factor for each of the years from year 1 to 5.
The annuity factor for each year is calculated as (1+r)^n, where r is the rate of return of 2% and the n the year in which the service fee relates to.
High savings rate is not a goal of federal economic policy. The goal of federal economic policy is to achieve full employment, economic growth and stable prices.
However 'high savings rate' is achieved when interest rates are increased in order to fight inflation and achieve 'stable prices' because people keep their money in the banks to take advantage of the benefit of earning interest BUT this is not always the case because 'higher interest rates' works against full employment by making it too costly for firms to borrow for investments which will definitely create jobs.
