Question

In: Economics

Choose a product which you are familiar with. Using the internet for research (please cite your...

Choose a product which you are familiar with. Using the internet for research (please cite your source), what is the price elasticity of demand for this product or group of products? What does that mean with respect to a 10% increase in the price of this good? What happens to quantity demanded?

Which of the 4 determinants of price elasticity of demand do you believe drives this outcome about the good's price elasticity? If there is more than one determining factor, please explain your reasoning. [for many goods, all of the 4 determinants come into play - I just want you to choose the one or two that you believe are most relevant).

Solutions

Expert Solution

SOLUTION:-

Let us take the example of gasoline ( fuels for running vehicles ).

* Price elasticity of demand shows how elastic the demand for a product is when its price changes.

* If a product is inelastic such as gasoline with no substitutes, even a large rise in prices doesn't have large impact on its quantity demanded.

* Whereas if a product is elastic even a small increase in prices would lead to huge fall in demand.

* Average price elasticity of demand for gasoline is -0.26.

* A 10% increase in price of gasoline leads to fall in its demand by 2.6%.

The four determinats of price elasticity of demand are-

(I) Substitutes

(II) Share of income.

(III) Time.

(IV) Nature of products.

* I believe not having any substitues for gasoline is the main reason why its price elasticity of demand is so inelastic.

THANK YOU, if any queries please leave your valuable comment on comment box.........

If possible please rate the answer as well..........


Related Solutions

Select a public corporation you are familiar with or which interests you. Using the Internet, write...
Select a public corporation you are familiar with or which interests you. Using the Internet, write a short one-page profile of the corporation and include the following information: Name of the corporation State of incorporation Nature of its operations Total assets for the most recent balance sheet Total revenues for the most recent income statement Net income for the most recent income statement Classes of stock outstanding High and low price of the stock for the past year
Choose a product you are familiar with. List the target market of that product, the behavior...
Choose a product you are familiar with. List the target market of that product, the behavior you would want consumers to do for that product, and the mental steps that may be necessary to move consumers to the behavior. Hint, here are some other mental steps/intervening variables, communication objectives in addition to awareness - knowledge of a benefit, preferring one brand over another
Choose a firm with which you are familiar in your local business community. Is the firm...
Choose a firm with which you are familiar in your local business community. Is the firm successful in following one (or more) generic strategies? Why or why not? What do you think are some of the challenges it faces in implementing these strategies in an effective manner?
Please choose an organization with which you are familiar and describe its culture in 7 dimensions.
Please choose an organization with which you are familiar and describe its culture in 7 dimensions.
Choose a consumer product with which you are familiar and use regularly; write a 1-2 page...
Choose a consumer product with which you are familiar and use regularly; write a 1-2 page SWOT analysis for that product.
Choose a product or service that you are familiar with (something you use or have used,...
Choose a product or service that you are familiar with (something you use or have used, something related to a job you or someone close to you has held, etc.). Are there a lot or few firms in the industry? Are the products similar or identical or without close substitutes? Are there barriers to entry and, if so, what are they?
Choose a company with which you are familiar. what are some of the ways in which...
Choose a company with which you are familiar. what are some of the ways in which it uses technology to leverage its human capital?. Please cite at least one reference to support your finding.
Choose a company with which you are familiar. What are some of the ways in which...
Choose a company with which you are familiar. What are some of the ways in which it uses technology to leverage its human capital?
Choose a concept with which you are familiar, and imagine that you have to teach that...
Choose a concept with which you are familiar, and imagine that you have to teach that concept to a classroom of students. Describe the concept that you will teach, then explain five specific things you could do to help students learn the concept. Describe what contemporary psychologists mean by the terms schema, script, personal theory, and worldview, and explain how each of these can influence learning and memory. Use concrete examples to illustrate your discussion.
Using your personal knowledge or the internet to select a product or service.  The product or...
Using your personal knowledge or the internet to select a product or service.  The product or service does not have to be an actual product or service – it can be completely fictional.  For the selected product or service, identify at least 5 costs involved with the product or service and complete the following questions.   Classify each cost as direct or indirect.  Identify the cost behavior as either variable, fixed or mixed.  Provide a brief (2 or 3 sentences) on...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT