In this post let\'s discuss elasticity. Talk about 5 items that you purchase, or
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In this post let's discuss elasticity. Talk about 5 items that you purchase, or would purchase, that have different elasticities. Explain what elasticity each item has and why you purchase, or would purchase them, anyway. You will need to be specific with your choices; i.e. not just food in general but some specific food item, not just water but tap water or bottled water or flavored water, etc. In this post let's discuss elasticity. Talk about 5 items that you purchase, or would purchase, that have different elasticities. Explain what elasticity each item has and why you purchase, or would purchase them, anyway. You will need to be specific with your choices; i.e. not just food in general but some specific food item, not just water but tap water or bottled water or flavored water, etc.Explanation / Answer
1. Car
Car is a luxury good which has a highly elastic demand. If price of car rises slightly, quantity demanded decrease by relatively greater amount. Because, When price increases, people will be most likely to use public transport rather than buying a car. Therefore, elasticity is greater than 1.
However, as car is a luxury good, if I have enough money to buy it and determined to buy it, then I will buy it at any cost.
2. Water
Price elasticity of water is inelastic in nature. No matter how much the price increases, people doesn't reduce the quantity demanded as it's a necessary good. Therefore, PED is always less than 1.
As water is necessary good, without any close substitute, I'll never stop buying it no matter what the price is.
3. Coffee
price elasticity of demand for coffee is elastic. Because, coffee has other close substitute like tea. If price of coffee increases, people will shift their demand from coffee to tea. Therefore, PED for coffee is greater than 1.
however, I am a coffee addict, so will buy it no matter what the price is.
4. Latest iPhone
this is again a luxury good demand of which is highly elastic. iPhone has a close substitute i.e. Android. If price of iPhone increases people will simply opt for Android reducing their quantity demanded for iPhone by a greater amount. So, elasticity is always greater than 1.
however, being an iPhone lover, I'll buy it even if the price is high.
5. Eggs
Eggs has no close substitute. Therefore elasticity of eggs is inelastic. Even if the price increases by greater amount people have no choice but to buy it. So, quantity demanded decrease only by very small amount. Therefore, elasticity of eggs is always less than 1.
Eggs which I use in preparation of almost all of my meals, I can't reduce my demand for egg, because for me it's a necessary good in my everyday's life.
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