There are 4 factors that influence the price elasticity of demand: •The availabi
ID: 1251623 • Letter: T
Question
There are 4 factors that influence the price elasticity of demand:•The availability of substitutes
•The specific nature of the good
•The part of income spent on the good
•The time consumers have to buy the good
In a 2–4 paragraph Discussion Board post, discuss the following:
•Choose a product you have purchased in the past month from a clothing or shoe store.
•Describe how each of the 4 factors contributed to the elasticity of the good.
•Is the product considered elastic, inelastic, or unitary elastic?
•In a few sentences, what effect does the current supply and current demand have on this product?
Explanation / Answer
I won't do this assignment for you, but I can be helpful. •Choose a product you have purchased in the past month from a clothing or shoe store. I bought a pair of Puma shoes. •Describe how each of the 4 factors contributed to the elasticity of the good. 1. The availability of substitutes: Close competition with other name brand shoes helped lower the equilibrium price. 2. The specific nature of the good: I don't really need shoes to live but they are nice to have. This implies my demand is fairly elastic. 3. The part of income spent on the good: I spent $80 on these shoes, which qualifies them as a major purchase. As a result, my demand is fairly elastic. Had the cost of the shoes been lower, I would not have been willing to incur as great of search costs in order to find the lowest price per quality. 4. The time consumers have to buy the good: I had an infinite amount of time to buy the good. Puma is open every day. As a result, my demand was fairly elastic. •Is the product considered elastic, inelastic, or unitary elastic? Elastic. Given the four factors described above, as a whole, the product is price elastic. •In a few sentences, what effect does the current supply and current demand have on this product? If the current supply increased, that would increase the quantity sold and decrease the equilibrium price. If the current demand increased, that would increase the quantity sold and increase the equilibrium price.
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