Using the FRED economic database (https://fred.stlouisfed.org/) let’s compare expenditures on cell phones with the price of phones. Unfortunately, as is often the case, it’s difficult to find data on exactly what we want but if you search for “real expenditures telephone” you will find a series for expenditure on telephone and facsimile equipment (faxes—maybe you have heard of them?). Then click Edit Graph and Add Line. Search for “expenditures telephone price” and you should find a price series (make sure it says price index) for telephones and facsimile equipment. To make comparisons easier, change the units to Index and set the index equal to 100 around 2001 for both series.

a. Between 2001 and 2015, what happened to expenditures? Prices?

b. Is the demand for telephones elastic or inelastic?