In: Economics
List three types of products that have elastic pricing, and three types of products that have inelastic pricing. Choose one of the inelastic products and think of a specific product and brand in that category. what do you think is the highest price the marketers could charge for that product, before demand would be adversely affected? Explain your thinking.
ANS
The elastic pricing is the pricing in which the increase or decrease in price causes change in demand and the inelastic pricing is the pricing in which change in price does not cause change in demand. Three types of products that have elastic pricing are sports car, furniture and chocolate bar, it means that if producers increase the price of these items then their quantity demanded will reduce. Three types of products that have inelastic pricing are salt , cigarettes and water, it means that change in their price would not cause change in their quantity demanded.
The inelastic product chosen is water and the brand in this product category is Aquafina, it is the brand of packaged water and since the water is the necessity for humans so the price increase of water would not affect its demand, the aquafina is the medium range packaged water and has a asking price of INR 20 per bottle and it can increase its price to INR 30 as its compititor which is Bisleri charges this price so Aquafina can still sell in the price of INR 30 but if it increases price more than that , then it will loose its consumers to Bisleri and the demand would be adversely affected.