Big Question:
Discuss whether clothing and electrical products would be likely to have an elastic or an inelastic price elasticity of demand.
Please write at least 200 words and remember to include an introduction, definitions of key terms and relate your economic discussions to the QUESTION.
Homework is due in on Thursday the 15th of November.
Any problems, please see more before the 15th of November!
Good Luck,
Mr Wickham
Price Elasticity of Demand
ReplyDeleteAny product in the world market can be price elastic or price inelastic. The responsiveness of quantity demanded to changes in the price of a good or service is known as the price elasticity of demand (PEd) of any of those products. If a small change in the price causes a big change in quantity demanded, the demand for that product is said to be price elastic. On the other hand, if a small change in the price of a product causes only a minor change in quantity demanded, the demand for that product is said to be price inelastic. There are a few factors which can affect whether a product is price elastic or price inelastic.
Clothing is an example of a price inelastic good. This is because of a few features, like the fact that clothing doesn’t have any or has very few substitute goods. Clothing is what you wear and that’s it, there is no substitute good for something like that. If the price of clothing in general goes up, people would not stop buying clothes because it is a necessary good and need, not just a want. In addition, there is strong brand loyalty with clothing. People like to shop in one specific clothes shop and if they like that shop then they will keep buying clothes there and so have brand loyalty because they believe that brand is better than others. Another factor that makes clothing a price inelastic good is the fact that there is little time to find an alternative for clothing. Apart from there being very little alternatives for clothing, you would have very little time to substitute it as clothing is a necessity and if you run out, you need something to replace it immediately. Lastly, as stated before clothing is a necessity and takes a very small percentage of a person’s income. Goods like clothing may be price inelastic in demand because they do not cost very much and any rise in their price will only take a little bit extra out of a person’s income, in comparison to an elastic good.
Electrical products are an example of price elastic goods. This is also because of a few features, such as the fact that electrical products have many substitute goods. For example, an Xbox is a substitute good to a Play station. If the price goes up for an Xbox, people can go buy a Play station which will be cheaper. A price rise in one product will have a small effect on quantity demanded of that same product, or of another substitute good. Electrical products also have little product loyalty, as there are many brands to choose from, for example if you want to buy a mobile phone you can buy an Apple iPhone or a Blackberry or a Samsung Galaxy… etc. Also, electrical products are luxury items and are very expensive. Not everyone can afford to buy electrical products and you usually would not have very many electrical items belonging to you as they are so expensive, and you would spend quite a lot of your income on a product like a computer or a laptop or the newest mobile phone out there. Electricity itself is not an elastic good as it is an essential need in our everyday lives, but electrical products certainly are as you can live without a mobile phone or a television. Lastly, there is time to find an alternative for electrical products. As electrical products are not a need, and there are many substitutes you can use that are easy to find, there is time to find an alternative. If you break an electrical product or lose it, you do not need to replace that item immediately as you can live perfectly without it, and there is time to find a replacement.
Price elasticity of demand is the degree to which changes in price affect changes in quantity demanded. Demand is elastic when a small change in price affects a large change in quantity demanded. Such products that show great variability in demand are known to have elastic demand. Such as Play Stations, if the price of the PlayStation decreases there will be a massive increase in the demand for PlayStations.
ReplyDeleteDemand is inelastic when a change in price does not bring about a correspondingly large change in quantity demanded, or any change at all. Said products are known to show inelastic demand. Such as cigarettes, if the price of cigarettes increase there won’t be a increase or a decrease in the quantity demanded as for some people cigarettes is an essential good as it contains nicotine, cigarettes produce a great addiction towards this. There are several points which can help us figure out if a product is elastic or inelastic. How much of your income do you spend on it? Is this a product that takes a big part of your income or is it an essential good? An essential good would be inelastic as you would not care buying a cheap product or an expensive one, this is because it is a need, and it is essential for our everyday life. Does the good have substitutes or alternatives? If they do have a large amount of substitutes they will be known as an elastic product. Does the good have a product loyalty? This means if someone likes a certain shop or product by any reason if the price of that certain product increases there won’t be a big effect as there is a product loyalty, this product would be inelastic. Period of time? the longer a price change holds, the higher the elasticity is likely to be, as more and more consumers find they have the time and inclination to search for substitutes.
In the case of clothing it is an inelastic product. This is because clothing doesn’t have any substitute, as there isn’t any other product that does the same function as clothing; there are no substitutes towards clothing so it is inelastic, also there can be a strong brand loyalty towards a product, a brand or even a shop, if you like a type of brand a lot and the price of all of the products of that specific brand increase you would not stop buying that product from that brand as there is a strong brand loyalty. Clothing is a necessity and it might only take a small percentage of our income, if someone needs more clothing for various reasons they would go immediately to buy another, this is because clothing is a very important necessity towards our everyday life, another reason for why clothing is an inelastic good is the little time to find an alternative, as for clothing there are little alternatives and because clothing is a necessity and if you lack of clothing there would be little time to find an alternative.
Electrical products is an example of a elastic good as there are lots of substitute goods, for example if the price for Xbox increases the quantity demanded for PlayStations increases this is because PlayStations can do the same functions as Xbox but they can buy the PlayStation at a lower price, which would benefit the buyer. Another reason for why electrical products are elastic is the fact that there is little product loyalty this is why if the price of product X increases less quantity demanded, this is because product X lacks of product loyalty, this might be because there are a lot of brands to choose from that can do the same functions as product X. Electrical products are often a luxury or a very expensive product, it is not a necessity this is why if the price of product X increases the quantity demanded decreases a lot this is because people can live without that specific product, it is not a necessity so therefore not many people will decide to buy a very expensive product that does not affect our everyday life.
It didnt let me publish the whole text
ReplyDeleteAlso not many people can afford to buy that specific product as more than 1.400 millions of people around the world live in poor conditions, so not many people can afford to buy a very expensive product. And finally a reason for why it is an elastic product is because there is a lot of time to find an alternative as there is a massive amount of electrical products that can do the same functions.
If we were talking about electricity itself we would see that it is a inelastic product, as it is an essential good, without electricity we wouldn’t be able to survive without it, there are also no substitutes for electricity and there is little time to find an alternative mostly because it is a necessity and there isn’t any alternative good that woul have the same functions as electricity.
Price elasticity of demand
ReplyDeletePrice elasticity of demand is the efect a price change has upon the quiantity demanded. A good can be elastic if the change in price is greater than the change in quiantity demanded. So this means that a good is elastic when a little change in price, has a big effect in the quantity demanded. If the change in price has very little efect on the quiantity demanded we asy the product is inelastic.
Clothing is an inelastic good. This is because of many reasons. It has few, or no substitute goods. For example talking abot a T-shirt, theres no other good (thats not clothing) that can be used insteadif a T-shirt. So you have to buy clothes, because you need it, this leads us to another factor that make clothing inelastic. Clothing is also a necessity, we need it, and although the price of it goes up, people will still buy it. The demand will decrease, but not very much. This is because its a necessity, so it doesn't matter what happens, people are still going to need it, so they will buy it. Some brands have very high prices, and they can put it up, bhut people will still buy it. This is because they have a strong brand loyalty. An example of this is Abercrombie. The clothes are very very expensive, this is one of the reasons to why people want it, and most of the time are able to buy it. Another factor that states if a good is elastic or inelastic is Time. As clothing is a necessary good, if for some reason you don't have clothes, you are going to need it quickly, so there will not be time to find an alternative. Another feature that determines if a good is inelastic is, if it's a small percentage of your income. In this case we would not be able to aply this to clothing, because it is a big percentage of your income. But this doesn't mean its not an important feature. Also if a good i addictive it can make it inelastic. This happens to tobacco, it contains an addictive substance, so no matter what the price is people will buy it because they cant sto smoking.
Depending on the electrical good we are talking about, it can be elastic or inelastic. For example the x-box. This would be a elastic good, as it has many substitute goods such as the playstation. So if the price of the x-box increases, then people will buy the playstation, wich will be cheaper. They are competitive products, amd very similar. This is a expensive or luxury item, so its not a necessity, we can live without it. Another feature that will help the good to be inelastic is a little product loyalty. So if the price will increse, the quantity demanded will decrease. Theres no layalty, so you are not going to buy it if the price increases. As i said before time is a very important feature, as there hast to be time for the costumer to find an alternative. This usualy happens yo moset of video games, and goods like this, but not to all of them. Mobile phones could be considerd an inelastic good, as people use it alot. They are also used for work. So it's really a necessity, as we can't live without one.
There are other electrical products whic are inelastic. As a washing machine can be. It's really a necessity, and has nearly no substitute goods. You also have little time to find another thing to wash your clothes, as clothes are usualy washed daily. Again its not a small percentage in your income, si it wouldn't make the good inelastic because of this (bread does have this feature, because it is only a small percentage in your income), and it is not addictive.
Sonia Dieguez
ReplyDeletePrice elasticity of demand is when the price rises and so the quantity demanded should contract in some goods and services. We can know exactly how much demand will contract or how much will it expand as price changes by elastic and inelastic. Price elasticity of demand or PEd is measured by comparing the percentage change in quantity demanded with the percentage change of price.
Elastic is when the price has a small change and the quantity rises or falls with a greater percentage than price.
Inelastic is when the percentage caused in price caused a much smaller percentage change in quantity demanded.
The demand for clothing could be mainly inelastic because even if price of clothes rises the people are still needed to buy clothes as it is essential and not just wanted although you can want one more than another. There tends to be a brand loyalty of clothes wich makes it more inelastic as if for example nike raised their products a 5% mostly everyone will still buy nike.
The demand for electrical products vary in the different type of product, if it is really needed or not. Play station 3 for example has many substitutes so it is elastic as if price of xbox or psp went down play station 3 will not be sold as much. But if the product is necessary and there is not much substitutes the product should be fairly inelastic.
Three main factors make demand more elastic or more inelsatic inelastic: Time, availability of substitutes, amount of income available to spend on the good.
The more substitutes there are the more elastic the demand will be. In the other hand if there is just one choice of one good and it is essential despite the price goes up you are still going to buy it as there is not a substitute.
Time is a very important factor as if you need that shirt or trousers and you need it know even if the price changes you need it know and you don´t have time to look for cheaper ones and even more if there is not a substitute of that t-shirt or good.
The amount a person can afford to spend on that good is a very important factor because if the good or service don´t cost a lot you will buy it even if you think it´s a bit expensive, in the other hand a expensive good like a car won´t be buyed without thinking as it is a lot of money.
Elastic and Inelastic Goods:
ReplyDeleteEvery good suffers a change in demand if there is a price change, however it can be a big change or a small one, this is measured with the elasticity of the product, which is found out dividing the % change in the quantity demanded by the % change in price. If the result goes from 0 to 1, the good is inelastic, however if it goes from 0 to 3 or more its elastic.
When a good is elastic, it means that if there is a price change the demand of the product will change greatly. However if a good is inelastic, it means that if there is a price change, it doesn't matter how big the price change is, the demand for the good will barely change. There are different type of elastic or inelastic demand curves, there is the perfectly price inelastic, when they are so inelastic that the price change wont have an effect on the demand, it has a PED of 0, then there is the perfectly price elastic demand curve, where the good is so elastic that the product cant change price because there are too much substitutes, it has a PED of infinite, and finally there is the unitary price elastic demand curve, when a change in price will cause the same amount in change of the quantity demanded, it has a PED of 1.
For example, clothing is a good, that depending on where you focus it can be elastic or inelastic, if the clothing is every day clothes, the good is elastic because there are lots of substitutes than probably have lower prices, however if it fashionable clothes such as Abercrombie, Hollister, Tommy Hilfiger.........., when brand loyalty exists then the good will be inelastic, because even though the price goes up people will keep buying them because of them being fashionable.
Another example is electric devices, depending on the person, a laptop, a mobile phone, an ipod can be an elastic or inelastic product, if someone using a mobile phone is using it for work then the good is inelastic, because its essential for someones life and work, it doesn't matter if the price goes up it would barely affect the demand curve, however if we are talking about a teenager, or a kid, for who electric devices aren´t so essential for life then the product is a bit more elastic, even though for teenagers they probably are essential.
In conclusion, goods can either be elastic or inelastic, it depends on wether the product is fashionable, essential, luxurious..............
ReplyDeleteWe can make a distinction between some goods and others by classifying them as elastic or inelastic. A good which is a luxury, which involves a large amount of our incomes and has brand loyalty, is known as elastic, because if you change the price, your quantity demanded would be dramatically affected. A good which is not a luxury but an item that we use every single day or basically a necessity is also known as a price inelastic good, because, as we as consumers, haven’t got many alternatives, we are still going to purchase this good after all, as it is necessity.
A good example of an elastic good would be clothing, though clothing can be both elastilc or inelastic. Clothing is a basic good, but, we have thousands of alternatives; we can buy some Levis jeans, mustang ones, or even Primark ones. Clothing is often specified as being an expensive or luxurious good, because unlike bread, it is a good which generally speaking, we can´t afford to buy every single day. So, as clothes are a considerable amount of our incomes, we are always looking for better deals (usually cheaper prices) and that’s why if the firm increases the price the quantity demanded will be lower. Clothing or fashion industry is a huge industry, and therefore involves thousands of brands that have their brand-loyalty from the consumers which means that; if you as a consumer, love every clothe from jack wills, you are still going to buy it, despite its price. This is the only factor that, if the price goes up, the quantity demanded remains unchanged. In the other hand, clothing as such may be inelastic; if the market price of clothing is changed as a whole, and increases the price of every single piece of clothing, then the consumers haven´t got another alternative but to buy your expensive clothes, as clothing is viewed as being a necessity in our 21st century society, as it´s not legal to go around without any clothes.
Another good example of an elastic and also inelastic good is electrical products. As in the fashion industry, the electrical one is full of competitiveness from all of the firms, and therefore a consumer has many alternatives in buying a PC. We can say that there are many substitute goods. Electrical devices are usually expensive and considered to be a luxury item, as it does become a noticeable amount of your incomes. There are some firms which unluckily do not obtain as much brand-loyalty as others, but if we just pretend to have a firm which has no brand-loyalty at all, then, if we slightly change the price of the new PC then we will see a descending quantity demanded, causing us to sell very little. Not everyone believes that a mobile phone or PC is a luxury; but a necessity. This completely changes the whole idea of the electrical device being elastic, viewed from a different perspective; a mobile phone may be a necessity in helping you to run your business. So this person must have a mobile phone so no matter what the price is, he or she will still have that same necessity of buying it. Another outcome that may affect weather the electrical product is inelastic or elastic is the market price. If we change the market price for televisions, then, as the whole price has changed, the consumer won´t be able to find many alternatives, as every TV´s price have changed, so that factor won´t change your quantity demanded. Another important factor that we must consider is brand-loyalty. If you want the new macbook pro from apple, then, no matter how high the price is, you are still going to by it, as you as a consumer, have already decided which one you want without even consulting any other alternatives.
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ReplyDeleteIn conclusion, if we change the market price of a whole industry the quantity demanded will remain the same as well as if you have a high brand-loyalty. If you sell a good in a very competitive industry then the consumer will be able to find many substitutes, and that does affect your quantity demanded as well as the time that the consumer has to find an alternative; the less time he/she has, the more chances you have of having the same quantity demanded, and the more time he/she has, the higher chances you have of having a decrease in the quantity demanded.
Big Question:
ReplyDeleteDiscuss whether clothing and electrical products would be likely to have elastic or an inelastic price elasticity of demand.
Price elasticity of demand means responsiveness of demand towards changes in price.
A product with an inelastic demand means that by increasing the price of the product really doesn’t affect the demand, i.e. – petrol & cigarettes, a smoker cannot suddenly stop smoking or smoke less because the price of cigarettes has increased, these are both examples of inelastic demand and by raising the price there would normally be an increase in sales revenue.
Elastic demand is the opposite of inelastic demand, which means that a change in a price of a product would change the demand of the same product. Some examples of elasticity of demand are Pepsi, McDonalds and Nintendo products, by lowering the price sales revenue would increase as consumers are both loyal to the brand but also sensitive to price. If, for example, Pepsi, runs a campaign for a short period with a 20% discount sales would
increase as consumers consider they would be getting a bargain.
Electrical products such as washing machines are inelastic since they are an essential in any house hold. Consumers would be more sensitive towards the price of the product and the brand. For instance a brand like Bosh, being very famous, does not have to suffer much of a fall in quantity demanded for most price rises. Whereas less famous companies like “Indesit”, tend to have to suffer relatively larger drops in quantity demanded even if their price rise is the same as the price rise affected by “Bosh”. Consumers may have a limited time to buy this particular product, As time passes there will be more and more substitutes available.
Clothing is another inelastic consumer good; this is because the everyday consumer would tend to buy on impulse. As a result, if a pair of “Levi’s” jeans falls in price sales would almost certainly increase due to price sensitivity. Non-branded clothes such as “Primark” is potentially more price sensitive to increase as consumers are prepared to pay a maximum price for non-branded clothing. Brand loyalty is how much people prefer a brand over other brands. Therefore brands that are famous e.g (Levi’s, Hollister & Ralph Lauren) have a high brand loyalty and generally have an inelastic price demand.
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ReplyDeleteA product in the market can have one of three demands inelastic, unitary or elastic. To calculate the type of demand of a product we use the Ped (price elasticity of demand) which is the % change in quantity demanded over the % change in price, the result shows if the demand is inelastic, unitary or elastic.
ReplyDeleteThe factors which affect the price elasticity of demand are,the number of close substitutes, the more close substitutes there are in the market, the more elastic is demand because consumers find it easy to switch .The cost of switching between products ,there may be costs involved in switching .The degree of necessity or whether the good is a luxury , necessities tend to have an inelastic demand whereas luxuries tend to have a more elastic demand .The proportion of a consumer’s income allocated to spending on the good , products that take up a high % of income will have a more elastic demand .The time period allowed following a price change ,demand is more price elastic, the longer that consumers have to respond to a price change. They have more time to search for cheaper substitutes and switch their spending. Whether the good is subject to everyday consumption, consumers care less in the change of price of the good of which they buy in an everyday habit.
From these factors we can see that the demand of clothes as a whole is inelastic, as it has no substitutes, is the only option possible. If there is a change in price of the clothing it won’t make a change in the demand as it is necessary product. But in the other hand clothes just as a brand are mainly different from each other as the brand which tend to be more expensive and of which the products are considered a luxury are elastic but in a small number of cases this can vary as the brand can get fashionable or get loyalty from consumers and so it turns inelastic and a brand which tends to produce cheaper products tends to be inelastic.
The demand of electrical products is generally elastic an example is the ps3, if you are going to buy it and there is an increase in the price you won’t buy as you don’t need it or there are substitutes that may be cheaper such as the Xbox or some Pc’s. On the other hand there are electrical products that are inelastic such as a fridge as there is no substitute so it does not matter if the price goes up the people will still buy it.
In conclusion ,I think for example if clothes as a whole are inelastic ,it doesn’t mean that all clothes are inelastic ,there are examples such as a shirt of the football team Rayo Vallecano ,it may be the same as a shirt of football the team Atletico ,but worth more money just because it has a different thing written on it ,so the Atletico shirt would be elastic as you don’t really need it and instead can buy a Rayo Vallecano shirt that is the same and cheaper.
In demand, every product can be elastic or inelastic. This means that there is a different effect on the quantity demanded depending on the price change. The effect depends on people's wants and needs.
ReplyDeleteWhen we say elastic, it suggests that there is a big effect in quantity demanded if we make a change on the price. On the other way, when we say inelastic, it suggests that there is a small effect in quantity demanded if we have a price change.
Clothing would be an example of an inelastic product. Since human existed, clothes were essential for us to live, especially in winter. We can say that it is essential because it can protect us from cold and it can also make us look pretty and cool. Essential products are very needed in society, so if we change the price, people will still buy it because they need them. This means that the change of the quantity demanded by a price change would have a small effect, and this means that clothing is inelastic.
Electrical products would also be an inelastic product. Those are almost part of our lives. Everyday we use electrical products: mobile phones, fixed telephones, television, music players, computers, etc. Some people might think that they do not use much electrical products, but in fact they are using some other products that are also electrical, like cars, buses, elevators, etc. For some people, some electrical products are so important and essential that they want them although the price is very high. This is referred as a strong brand loyalty, which is the case found in most of the new electrical products. When people has a strong brand loyalty amongst a product, it can be said that the products is inelastic, because if some people want them so much that they ignore the price, it means that it is very needed, so the effect on the quantity demanded of electrical products would be very small. So electrical products are inelastic.
Price elasticity of demand is a term used to describe how much a price change of the actual good will affect the quantity demanded. So if the price of a good goes up by 10% of its original price, a inelastic good would be one that the quantity demanded fell by less than 10% but if it falls for more than 10% then the product is elastic. Many things can make a product elastic or inelastic, for example if we spend a very little part of our income in it (like for Bread) even a 20% rise in the price we could probably live with.
ReplyDeleteClothing is a very variable product when speaking about elasticity one could approach this in many different ways, for example the clothes we buy in a street market which sells at very low price we could live with some rise in the price because it would be quite insignificant this clothing would be inelastic. On the other hand if you buy clothing at a very fashionable store with very high prices probably we would have to save some money at the end of the month to be able to cope with a small rise because the price is already very high. So if price went up at your very fashionable store for someone who does not care for the clothing brand (i.e. has no brand loyalty) the clothing would be quite elastic as a small change would affect in grand measure the quantity you demand. But also the thing with very fashionable clothes is the fact that they will not be fashionable forever, the Armani spring collection will be forgotten as soon as the summer collection comes in, and then the interesting thing is what happens to the spring collection. The spring collection gets taken to an outlet store where the price has been significantly reduced so then here it would become more inelastic, so the clothing in very famous shops is temporary elastic unless you have brand loyalty in which case it would always be inelastic.
Electrical products have a similar problem to clothing but not the same. “Electrical products” is a very ambiguous term for example an iron or a washing machine would be products that we probably need so they would be more inelastic. But the real problem with electrical products is when we come to things like mobile phones and gaming consoles because those have a “life time” in the stores as soon as the same company brings out a new console or a new phone the old one will be sent to oblivion. Normally these products like games or consoles are very high priced so they will be elastic unless you have brand loyalty or your friends are acting a lot of peer pressure on you in which case the product will be more inelastic. Of course when the “store life time” of the product is near the end the price will go down and so it will slowly become more inelastic until the product is finally substituted by the newer, more expensive and more elastic product.
Javier Silva
ReplyDeleteWe say that any product in the market can be elastic or inelastic. If the change in price results in an even greater change in the quantity demanded, we turn to say that it it elastic. However if the change in price has very little effect on the quantity demanded we say that it is inelastic. To know whether it is an elastic or inelastic we can look at some features. For it to be price elastic it needs to have either lot of substitute goods, little product loyalty, expensive or luxury items and time to find an alternative so if it has those features them it would be elastic price.
In the other case for a price to be inelastic it needs to have: few substitute goods or addictive, little time to find an alternative, necessity or small percentage of your income and a strong band loyalty. So in conclusion we can say a good is elastic when a little change in price, has a big effect in the quantity demanded. If the change in price has very little effect on the quantity demanded we say the product is inelastic.
Firstly clothing is an inelastic good, we say it is inelastic because even if the price rises (goes up) people will still buy it because it is something we need and it is essential in our daily life. But for example if we talk about clothe such as Abercrombie or Hollister then brand loyalty exists, because eventhough the price goes up people will keep buying them because of them being fashionable and because it is clothes that many people like buying. We turn to say that as I said before a very good example is Abercrombie because it has a very small percentage of our income. Another feature of clothe being inelastic is because you have a little time to find an alterative. Apart from there being very little alternatives for clothing, you would have very little time to substitute it as clothing is a necessity and if you run out, you need something to replace it quite quickly.. So we can say that if the price goes up the demand will will decrease, but not as much. Because it is a necessity, so it doesn't matter what happens, people are still going to need it so in that case they will still be willing to buy it.
Secondly, we are going to talk about electrical products, and that is different because it depends on what the product it is but in general products such as play station, X-box… then then it would be elastic. This is because there are several substitutes for every electrical product. Electrical products are luxuries and therefore not very essential in life and are only demanded when their prices are reasonable or affordable.
Then another feature might be that it is an expensive or a luxury item so it is not something we do need is more of a want as we can live without it. It is a little product loyalty that means that if the price increases the demand will decrease, as it is something that is not necessary In our lives so people wouldn’t expend so much money in it. But then we can find electrical products which are inelastic as they are things we need for example a mobil phone, many people work with it, or a washing machine, it is something we all need and even if the price goes up people will still buy it, as it would be essential for us.
Paula Garcia 10N
Elasticity of demand is the effect a Price has upon the quantity demanded. There are different factors that cause a good to be inelastic or elastic. It depends how much of your income you spend on it, so if it is a luxury good or an essential good. It also affects if the good has substitutes or other alternatives. The period of time would also make a good be elastic or inelastic, as well as if the good has product loyalty. If the good is inelastic the change in the price has very little effect on the quantity demanded and if the good is elastic the change in the quantity demanded is even greater than the change in price.
ReplyDeleteWe can see that for example clothing would have an inelastic elasticity of demand. As human beings we use cloths daily in our lives the 24 hours of the day and for this we have no substitutes you either go naked or with clothes. With clothes there is also a problem of time to find an alternative. Also clothes are a small percentage of our income so it doesn’t really affect how much money we spend in buying our clothes.
Electrical product can be both elastic and inelastic. They can be elastic like for example an iPod or an MP4 they are both substitute of one another, both goods are examples of luxury or expensive items as they are things that not everyone can afford. With these goods there is plenty of time to find other alternative. But they can also be inelastic as these products can be addictive, especially for teenagers. Strong brand loyalty can also affect the elasticity of a good as people who always buy things from apple will continue buying products that belong to apple.
Andrea de Cruz 10N
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ReplyDeleteThis comment has been removed by the author.
ReplyDeleteWell done everyone, some good answers here.
ReplyDeleteGrades:
Patricia: B-
A good answer. You have not made the connection between different types of clothing (luxury branded clothing and everyday clothes), so you have not gained as high a mark this time.
Carlos: B-
A good answer. as above, you have not made the connection between different types of clothing (luxury branded clothing and everyday clothes), so you have not gained as high a mark this time.
Sonia. B
A good answer and you have made the connection that some electrical goods might have elastic demand and some might be inelastic. You needed to do the same with clothing to get a higher grade.
Diego: B
A good answer but you need to relate the information to the question more for a higher mark. Keep referring to examples of clothing or electrical goods that explain your answer.
Marta: B
A very good answer, but you could have more about the factors that influence a good to be elastic or inelastic. The PEd equation in the introduction didnt help the flow of your answer. The PEd calculation is best not used in an essay answer.
Cristina: B
A good answer, but it gets a bit confused as you try to explain how some clothing goods or electrical goods might be elastic or inelastic. All the information is there, but it does not read very well.
Sophie: B-
A good answer but a bit general knowledge at times. Keep to the economic reasons why a product might be price elastic or inelastic. Some good use of examples and overall a good answer with the idea that different electrical goods have different elasticities etc.
Pepe: B-
A good answer Pepe, but you loose the point of the question at times. Not a well organised answer. Your conclusion is not clear and takes away from the rest of your answer. Be careful to make your point carefully and use examples carefully to express economic ideas.
Lily liu: B-
A good answer but you failed to make the point that some electrical goods and clothing are elastic and some are inelastic.
try and use more of the factors that determine whether a good is elastic or inelastic for a higher mark.
Javier: A
An excellent answer with a good command of the information and an interesting use of time and how it will change the elasticity of goods, very good. you could have outlined the factors that help define whether a good is elastic or inelastic in your introduction for a higher mark.
Paula: B-
A good answer Paula, but at times the arguments that you are making is not clear. Try and plan your answer
Andrea: B-
Good answer Andrea but you didnt get the idea that some clothing or electrical products might be elastic and other types of clothing or electrical products inelastic. Designer jeans are different to jeans you buy in carrefour!
Maggie: B-
A good answer, but you have failed to make the connection that clothing can be elastic and inelastic (electrical products too). You could have defined the factors that define why a good is elastic or inelastic in more detail.