Inelastic Goods

When there is a large increase in the price of a product in the short run it results in inelastic demand because there is little time to adjust to the increase and find an alternative product. Let’s say the consumer uses the local bus service to go to work. On the way to work one day he notices that the prices of transportation will double beginning tomorrow. In the short time he may be forced to continue paying the higher prices until he can find alternative transportation. As time passes, the consumer can make alternative choices such as carpooling, working from home, or riding a bike to work; therefore, the cost increase for the transportation would be elastic.

The law of demand shows that a.there is an inverse relationship between price and quantity demanded.b.the demand curve is positively sloped.c.when the price of a good increases, the quantity demanded increases.d.the supply curve is

Directions: Identify the letter of the choice that best completes the statement or answers the question. Then mark your response on the answer sheet. Unless otherwise stated, demand curves are negatively sloped and supply curves are positively sloped. The midpoint and point formulae for elasticity are, respectively:

One non-price item that has definitely impacted my demand is the recent increase in minimum wage. Since I have seen a pay increase I am now able to buy things I would not have been able to afford before. Looking at this long term it is likely that the overall price of goods will increase and the market will eventually return to equilibrium. Another factor that has caused me to change my purchasing habits is my change in tastes. Recently I have developed a taste for organic foods so I have decided to stop buying fast food all together as well as processed foods from the supermarket. So in terms of my individual demand curve for fast foods and processed foods it will cause a leftward shift. This will also cause a rightward shift of the organic foods demand curve. Another instance involves changes in expectations. This factor has the ability to simultaneously affect supply and demand. If I expect that prices for goods are going to increase at a later date my demand will increase now. If suppliers foresee prices rising in the future they will supply less now and supply more when the prices are higher. Overall there are many different factors that affect how individuals

Elasticity of demand is a measure of responsiveness to a price change of a good or service. When demand is elastic, the percentage of a price change of a product will result in a larger percentage of quantity demanded (McConnell, p 77). It basically means reducing the price of a good service will result in a greater quantity demanded and an increase in revenue for the seller. When demand is inelastic, a change in price will result in a reduction of quantity demanded, which will then lead to a revenue decrease (McConnell, p 77). To demonstrate elastic and inelastic demand results, Company A sells 100 pens at $1.00 a piece each day, making their revenue $100.00. Company A

Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.

The Law of Demand states that as the price increases, then the demand will decrease, and vice versa. In the article, the demand for turkeys increases during Thanksgiving, while the price drops. The change in demand is due to the increase in preferences for turkeys. During the holiday season, people prefer to eat turkey at the dinner table with family, so the demand for turkeys will increase. The Law of Supply states that as the quantity supplied increases, the price should increase, and vice versa. This is opposite in respect to turkeys as the quantity supplied increases as the price decreases. This is because the supplier’s want to attract the customers to buy their product and not their competitors. Inelastic supply is when the quantity supplied remains constant as price changes. This relates to the roses and fresh turkey, as there is a limited supply of these products, so the price will change but the supply will stay

Have you thought about other things that are inelastic? Some other products that I find to be inelastic are like for one is gas. I feel that gas is inelastic good because we depend on the gas to run our cars that get us from point A and point B. It shows that if something happens to a oil line which happened recently that even though gas prices are going up that the number of customers buying the product are about the same because everyone who drives a car needs gas to be able to use it. Another inelastic good is bottled water that we all depend on since we need it to survive. Water i feel is the most inelastic good because we need water and people aren't going to stop buying water unless it has bad bacteria in it and people will get

The diamond cartel has been in existence for over a hundred years. (Spar: 2006) It has faced many issues in order to survive and prosper. (Kretschmer: 1998) Rhodes’ method was sufficient during the early 1900s. (Spar:2006) By 1930, the price of diamonds had fallen and the war was looming; Europeans were not interested in buying diamonds. (Epstein: 1982) It changed ownership to the Oppenheimers around about the Great Depression. Thus began the exploitive marketing tactics of the 20th century. (Epstein: 1982)

College tuitions are more inelastic. Our society has deemed it necessary to have a degree. Regardless if tuition increases, the demand will stay relatively the same. There are few alternatives to having a college degree and therefore the market is more limited. Price fluctuation will not impact consumer demand extensively, therefore it would be considered inelastic.

False, price inelastic implies that any increase in price has less effect on the quantity demanded.

Also, economist use inelasticity to determine how the demands for health care services. Most medical care is relatively inelastic. Pain, critical needs, fear of uncertainty, and insurance tend to reduce the role of price in patient decision making. Most hospital face inelastic demand, especially for emergency services, yet they charge less than profit-maximizing prices

When a good is a necessity it is something that is needed; unlike a simple desire to have something. These items have more of an inelastic demand even if the prices fluctuate. Wheat is a rich commodity in our country. The demand for wheat is inelastic. No matter how high the price rise the demand will still remain high in view of the fact that the price is determined by supply and demand. There are many producers of wheat which does not raise the profit level much for the farmers since their competition are all selling identical products. Other items, such as; basics in personal care, food, commodities, and medicine. The basic items that are needed to survive. Demands for these items may change over time but will not change very much. Their value can fluctuate if there are comparable substitutes available. Personal care items such as clothes and shoes are not in a single category where choices are concerned. There are a wide variety of manufactures and stores that sell them. So if the price raises the demand would be elastic because of substitutes. Food as a basic need is inelastic. However, if the prices were to rise on beef consumers could choose to substitute eating chicken, turkey, or pork instead. So even though the prices rose the demand would not increase because of acceptable substitutes. Medical service as a necessity is inelastic in demand. This is a service that is unquestionably needed for survival.

Understanding the fundamental concepts of economics allows us to analyze laws that have a direct bearing on the economy. These laws and theories are essentially the backbone of how economics is used and studied. The law of demand can be expressed by stating that as long as all other factors remain constant, as prices rise, the quantity of demand for that product falls. Conversely, as the price falls, the quantity of demand for that product rises (Colander, 2006, p 91). Price is the tool used that controls how much consumers want based on how much they demand. At any given price a certain quantity of a product is demanded by consumers. As the price decreases, the quantity of the products demanded will increase. This indicates that more individuals demand the good or service as the price is lowered. This can be illustrated using the demand curve. The demand curve is a downward sloping line that illustrates the inversely related relationship of price and quantity demanded.

Though the market demand curve is downward sloping, each seller perceives the individual demand curve facing them to be perfectly elastic at the given price. Given this demand curve and their cost structures, sellers try to produce an output at which they can maximize profits.