Shop This project has to do with price elasticity, which is a measure used in economics to show the responsiveness of the quantity demanded of a good or service, in regards to the quantity demanded for a good or service to a change in its price. It will also give the percentage change in quantity demanded in response to a change in price. (wow. coursesmart. com/97812568314/page 551). A measure of the relationship between the change in quantity demanded of a particular good and a change in its rice relates to prices sensitivity.
If a small change in price is accompanied by a change of quantity demanded, the product will be elastic. A product that is inelastic is when a large change in price is accompanied by a small change in the quantity demanded. Elasticity is sensitive to change in price, the degree to which demand for a good or service, in this case the flowers I am selling, varies with its price. It has to do with sales, when sales increase with a drop in price and decreases with the rise in price.
Things like appliances, cars, and other non-essential, or luxury items, show elasticity of demand, it is because they are not essential items such as medical supplies, food, or etc. (www. businessdictionary. com/definition/ elasticityofdemand. html) Inelastic demand is when a demand for a product doesn’t increase or decrease with a fall or rise in its price; an increase in price would increase the revenue regardless of a fall in the quantity demanded. Inelastic examples would be groceries, gasoline, etc. things that are necessities.
The ercentage change in quantity demanded is less than the percentage change in price. It is also unresponsive to changes like demand, when it falls to increase in proportion to a decrease in price. (Tocker, R. (November 26, 2013) Econ 212 2 203 3 [chat 4]. Retrieved from Colorado Technical University Virtual Campus. ECON212 13048-02 Principles ot Microeconomics: nttps://campus. ctuonline. edu) The price of a laptop increases by 20% and there is a 40% drop in quantity demanded of the laptop. Then formula would be: Formula = Percent of change in Quantity demanded of Laptop
Percentage of change in Price of Laptop Quantity Demand 40% = 4 = 2 Price Increased 20% 2 Since the result is greater than 1, the demand for the laptops is elastic, and the effect on total revenue of an increase in price which will mean that the total revenue will fall. Inelastic demand is Just the opposite of elastic demand, because consumers will buy it regardless of price. Formula = Percentage of quantity Demanded of Cigarettes Percentage of price increase of Cigarettes Demanded The price of cigarettes increased by 10%, and there is a 5% drop in the quantity emanded. Quantity Demanded 5% Price Increased 0. 10 Since the result is less than 1, the demand for cigarettes is inelastic and the effect on total revenue on a decrease in price, which will mean that revenue rises, then total revenue will be unchanged. (wrww. economicsrevealed. co. uk) I think bridge tolls are inelastic, people will pay them regardless of price; it helps to maintain roads and reduce traffic congestion this is something people will Just add to their daily expenses for getting to and from work. As far as beachfront property is oncerned, I think many people would love to own beachfront property; however, it is not a necessity this would be a luxury, which is elastic.
Gourmet coffee and cell phones could be both either elastic or inelastic, depending on if you believe it is a necessity or a luxury. My personal opinion is that it is a necessity, but the applications and downloads that are available to you are a luxury, an added feature is something your do not need. I could not imagine being without my cell phone, but I don’t want to pay for all the extra apps that are available. I honestly believe that gasoline is inelastic because you need it to travel, getting back and forth to work, etc.
Regardless of what price the gas may be we will pay it in order to get to our destination. Owning and running a floral shop, I have to look at the supply and demand. While Valentine’s Day is when roses are in high demand, but supply is low; however, you also have a higher demand in flowers during Christmas and Hanukkah, Mother’s Day, Easter, and Memorial Day. The best time for me to raise prices would be in February, ecause of the high demand; again in May to deal with the demand for Mother’s Day, Memorial Day and weddings throughout the summer months.