supply and demand elasticity

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fzvyyr46

Economics

Description

  • Identify two (2) elastic and two (2) inelastic goods that you have purchased in the last month and explain the main reason why you identified them as such. 

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Explanation & Answer

I have bought a number of goods with inelastic demand lately.  Let me look at two of them here. 

First, I bought a container of salt.  It weighed 26 ounces and cost $.48.  The demand for this product is inelastic because it does not take up a significant portion of my budget.  If the price were to double, I could afford it just as easily as I can now and would surely not notice the difference.

Second, I bought a new air conditioner condenser for my car.  This did cost a lot of money.  However, demand for it would be inelastic even so.  This is because it is something that has no real substitutes.  Since I live in a place where it gets very hot in the summer, I need the air conditioner.  Goods with no substitutes typically have inelastic demand.

I have also bought things whose demand is elastic.  Let me look at two of them.

First, I bought a certain brand of whole wheat bread.  Demand for this is rather elastic because there are many kinds of substitutes for it.  I could have bought a different brand of bread.  I could have bought a different type of bread (for example, 7-grain bread or white bread). 

Second, I bought a pair of swimming trunks.  Demand for this would typically be elastic because this is not something that the average person needs right away.  People can easily afford to wait, as I did, until the item goes on sale.



Anonymous
I was struggling with this subject, and this helped me a ton!

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