What are the major determinants of the elasticity of demand? When would you want to own a business that sells price-elastic products? Why? Please do not Copy and Paste need original thoughts

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Hubert KochLv2

2 Apr 2018

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A- Think of another good that you have purchased recently Be specific (e.g. is it breakfast cereal in general or Cheerios cereal specifically). If the price of this item increases, how would this affect the quantity of the good that you consume? Is the Demand for this good Price elastic or Price inelastic? Justify your classification by talking about the determinants of elasticity as they apply to this product. Say price is on the rise for this product and you are the manager of a store, would you be thrilled to be selling this product? Under what circumstances would you want to own a business that sells this product? In other words, how does an increase in price for this good affect your Total Revenue? Using specific examples, relate the concepts of Cross Elasticity and Income Elasticity to this product.

B- What changes do you make to your demand for gasoline when the prices start to climb up?

C- Would you want to own a business that sells price-elastic products or price-inelastic products? Why?

What are the major determinants of a product's price elasticity of demand? Studies indicate that the demand for Florida oranges, Bayer aspirin, watermelons, and airfares to Europe are elastic. Why?

redmouse420

Why are measures of elasticity important? How does a business determine whether to increase the price of the product it sells in order to increase revenues? Please do not copy and paste.