in the study of economics
2006-07-03 02:18:26 · 8 answers · asked by kandie 1 in Education & Reference ➔ Homework Help
Demand is the reason consumers buy stuff. It's their desire to purchase something. Elasticity is flexibility. Elasticity of demand refers to changes in demand.
Take gasoline prices in the United States, for example. There is always a steady demand for fuel, but it changes. On big holidays, such as Christmas and Thanksgiving, people travel more, and the demand for fuel goes up. So does the price. After the holiday, demand goes back to normal, and prices adjust accordingly. This is significant because suppliers must constantly change to meet demand, without over-producing.
If they make too much of something, then the demand is not high enough, and prices drop too low.
2006-07-03 02:27:42 · answer #1 · answered by Privratnik 5 · 0⤊ 0⤋
There are basically two elasticity of demand which can be talked about, the elastic and inelastic. Basically the main understanding here is the change in proportion in relation to the change in pric of a good (as an example).
If you have a good which has an elastic demand, this could signify that when there is a 5% change in prices, the quantity of good will decrease by a higher percentage.
For the inelastic goods, such as cigarretes and alcohol where this goods are an addiction, a 5 % increase in price will only result in a decrease in quantity, less than 5 %.
Its simple really...Take some time to read the text you have and relate it to some real life examples.
2006-07-03 09:26:23 · answer #2 · answered by j o e Y 2 · 0⤊ 0⤋
Elasticity of demand relates to the law of supply and demand, which says when the price goes up the demand goes down, and vice versa. Elasticity of demand measures HOW MUCH your demand goes up or down when the price moves.
A good example of this is the high cost of gasoline. If you have a big honkin' SUV, which gets 14 mpg, but you have to commute to work every day, you have low elasticity of demand. This is because if the price goes a little higher, you will probably buy just as much gas. If the price went to $20 per gallon, of course, you'd buy a different car or take the bus, and then buy less gas. But changes in price create only small changes in consumption, when elasticity of demand for a product is low.
2006-07-03 09:31:34 · answer #3 · answered by Matthew B 1 · 0⤊ 0⤋
It represents how how much you need or want a product (or service). Inelastic demand is for a product that the consumer can't live without (a need). They would pay for it no matter the price in most cases. Examples are insulin for diabetics and paramedic trips for shot people. Elastic demand, on the other hand, is for stuff we can live without (wants). Only certain prices are okay; examples are videogames and cookies. The slope (gradient) of the supply-demand curve represents the elasticity of demand. I think inelastic has gradient closer to infinity while elastic has closer to 0.
2006-07-03 09:28:28 · answer #4 · answered by Captain Hero 4 · 0⤊ 0⤋
Well, you have to know how much of something is demanded. If it is inelastic, then the price cant really change. If the demand is elastic, then it moves alot and u need to have alot on hand.
ANY TIME
2006-07-06 14:59:40 · answer #5 · answered by barnbabe1416 1 · 0⤊ 0⤋
Inelastic: Price changes have very little impact on the quantity of a good we buy. (The price of gas has increased to $3.00/gal, but we still fill our tank every payday (give or take)). This is an inelastic product.
Elastic: Price changes have a noticeable impact on the quantity of a good we buy. (If the price of Coca Cola were to increase to $2.00/btl, we would probably purchase less Coca Cola, and purchase Pepsi or RC Cola, given all other comparable goods stay the same price) This is an elastic product.
2006-07-03 21:56:09 · answer #6 · answered by mikechampagne1 2 · 0⤊ 0⤋
In terms of farm production guide. Most agricultural products like rice, coconut are inelastic. Quantity demanded does not change much even if there is a big decrease or increase in its price. Whenever there is an overproduction of farm crops due to good harvest, prices of said products decrease.
2014-02-24 08:56:05 · answer #7 · answered by ? 2 · 0⤊ 0⤋
elasticity of demand which is the changes of demand as prices change has 4 major significance
1)it shows if the good is a neccesity or a luxury.
2)it gives the producer an insight on his advertisment campaign
3)helps producer to know if it will be better to shift taxes to the comsumer............ and
4) gives you a question to ask!
see ya!
2006-07-03 09:33:59 · answer #8 · answered by spider-man 2 · 0⤊ 0⤋