1. Price Elastic or Inelastic Good
a.What is an example of a product (or group of products) which you buy or sell whose demand is price inelastic (or, if you prefer, price elastic). In your answer, be sure to state carefully what it means for demand to be "price inelastic" (or price elastic).
b. What is it about this product or these products that makes either you or buyers in general TEND to continue to purchase it (if you’re thinking of a case of inelastic demand) or TEND to stop purchasing it (if you’re thinking of a case of elastic demand) when the price rises?
c. Consumers are supposed to be more price elastic after a price increase as more and more time passes and they find ways to alter their spending habits. Is your reaction different after a longer time period to adjust, or does the time period matter in this case?
d. An important issue shaping consumers' decisions is always the availability of good substitutes for a product. How does that factor enter into your example?
a) We buy gasoline which is inelastic, it is inelastic because as the price of the gasoline increases the demand for the good doesn't change much. The lower the change in demand due to a change in the price the more inelastic it will be.
b) The good is a necessity, that is why the buyers tend to consume it at the same rate even if the price of the good increase. If we have vehicle we will buy it no matter what. It becomes a necessity.
c) Yes, after a longer time more and more substitute of the gasoline will be present for example, Shale gas, solar, electric car etc. that will increase the number of substitute we have and make the demand for gasoline more elastic.
d) Solar cars, electric cars,etc are substitute and alternative form of energy that can run out cars are substitutes for gasoline. More substitute = more elasticity
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