this deals with macroeconomics
2006-10-24 10:06:10 · 5 answers · asked by Anonymous in Education & Reference ➔ Homework Help
elastic means that the percentage change in demand is effected by the percentage change in price.
For example if you increase the price of a good such as Pepsi, then more people are likely to stop buying pepsi and perhaps buy an alternative such as coca cola.
inelastic means that a percentage change in demand is not effected by a percentage change in price.
For example if you increase the price on cigarettes, the chances are that most people who buy cigarettes and smoke will not stop buying them, just because the price has gone up.
When working out the figures, if your result is more than 1 then the product is elastic. If it is less than 1, the product is inelastic. always ignore the minus sign!
2006-10-24 10:17:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
"Elastic" and "Inelastic" are adjectives that refer to demand. "Demand" is both the desire to obtain a certain product or service AND the ability to pay for it.
When demand is elastic, it stretches. It gets bigger, as the price goes down. I love ice cream, but I only buy it, if it's on sale. If the price goes down, I buy more. If the price goes up, I buy less (or none, at all). Elastic demand is a characteristic of luxury products and services.
When demand is inelastic, it stays the same, no matter what happens to the price. I have to have a toothbrush, and I have to replace it, every time it gets worn out. If the price rises, I buy a toothbrush every month or so. If the price falls, I buy a toothbrush. evrery month or so. Inelastic demand is a characteristic of necessary items.
2006-10-24 17:16:55 · answer #2 · answered by Larry Powers 3 · 0⤊ 0⤋
elasticity of demand.
if something is elastic...the price will affect demand.. for example, price of a shirt goes up, fewer people will buy it. price of a shirt goes down, more people will buy it.
if something is inelastic..the price will not affect demand. for example, the price of insulin. someone who is diabetic relies on this to survive. if it becomes more expensive, the demand for the item will still be the same.
2006-10-24 17:17:41 · answer #3 · answered by alcmena 4 · 0⤊ 0⤋
elastic: polo mints. If you double the price of polo mints, suddenly nobody will want fresh minty breath.
inelastic: oil. Double the price of that, and you'll still sell just as much.
2006-10-24 17:09:53 · answer #4 · answered by wild_eep 6 · 1⤊ 0⤋
Do Wot? Innit??
2006-10-24 17:17:20 · answer #5 · answered by Len 2 · 0⤊ 0⤋