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In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported...

In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported by course concepts. Your initial post is due by Wednesday to allow other students to respond.

Give an example of price elasticity of demand and an example of price elasticity of supply. Be specific.

Cite sources please

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Answer - Price elasticity of demand measures the responsiveness of the change in demand resulting from the change in price. This process helps in finding out whether the price can be changed or not in order to earn more profits.

Likewise , if a cold drink company wants to increase the price of the coldrink by $ 2 per bottle , but is not informed regarding if it should do or not , it should consider the following

Original price = $ 10

Final price = $ 12

Original demand = 50

Final demand = 60

Elasticity = (10/2)*(10/50)

= 5*(1/5)

= 1

Hence the demand is unitary elastic. This means that if the price will be chaged by $ 2 as proposed , the demand for the cold drink will fall.

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