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I elastic

Published on Dec 22, 2015

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1.

INELASTIC

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2.

The situation in which the supply and demand for a good or service are unaffected when the price of that good or service changes.

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3.

If the price of salt increased, demand would largely be unchanged. It is only a small % of income and people tend to buy infrequently. It is a good with no real substitutes at all.

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4.

Meaning that a 1% change in the price of a good or service has less than a 1% change on the quantity demanded or supplied.

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5.

Bought very infrequently, diamonds are the ultimate luxury with few exact alternatives. You could buy other precious gems, but others may not have the same allure as diamonds. A cut in price wouldn’t increase demand very much.

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6.

The demand curve for a perfectly inelastic good as a vertical line, because the quantity demanded is the same at any price.

7.

The Apple brand is so strong that many consumers will pay a premium for apple products. If the price rises for apple iPhone, many will continue to buy.

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Marlen Sandoval