Show
Now that you have a general idea of what elasticity is, let’s consider some of the factors that can help us predict whether demand for a product is likely to be elastic or inelastic. The following are important considerations:
With these considerations in mind, take a moment to see if you can figure out which of the following products have elastic demand and which have inelastic demand. It may be helpful to remember that when the buyer is insensitive to price, demand is inelastic.
Self Check: Explaining ElasticityAnswer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times. You’ll have more success on the Self Check if you’ve completed the two Readings in this section. Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section. What would cause the demand for a good to be relatively inelastic?The main factors that determine demand are price, price of substitutes, income, taste, and expectations of future price changes. Other minor factors do come into play, such as brand loyalty. Price inelasticity usually occurs with products that have fewer close substitutes, which means fewer options for customers.
Which of the following would make elasticity of demand more inelastic?A short period of time to make choices will result in more inelastic demand for a good. The more time is there to find alternatives, more price elastic will be the demand.
Which of the following is likely to have the most price inelastic demand?The most common goods with inelastic demand are utilities, prescription drugs, and tobacco products. In general, necessities and medical treatments tend to be inelastic, while luxury goods tend to be most elastic.
What would cause the demand for a product to be inelastic quizlet?Demand is inelastic when the percentage change in the quantity demanded is less than the percentage change in the price of the good or service. The price elasticity of demand is less than one.
|