Discussion Board 21919 Unread Replies 1919 Replies

Discussion Board 21919 Unread Replies1919 Repliesdiscussion Board R

Discussion Board Requirements(please review syllabus for more detailed explanation) 1. Initial post: 3-4 paragraphs, must have at least an in-text citation and reference in APA formatting, answer the question 2. Peer responses: two peer responses of at least one paragraph in length. any response to my questions will count as well 3. First post due by Thursday by the FIRST Thursday of the module by 11:55pm 4. Week ends by Saturday at 11:55pm Rubric: 60 points for initial post(20 points for having first post by Thursday) 40 points for two peer responses Question: Analyze two goods/services that you think are elastic and inelastic in your daily life that you have recently purchased or not when the price changes(relate your answer to the characteristics of elasticity).

Paper For Above instruction

The concept of price elasticity of demand plays a crucial role in understanding consumer behavior and how different goods and services respond to price changes. In my daily life, I have observed that certain goods are elastic, meaning their demand significantly changes with price fluctuations, while others are inelastic, exhibiting relatively stable demand regardless of price shifts. Exploring these examples offers insight into consumer sensitivity and market dynamics.

One example of an elastic good in my daily life is luxury clothing. When the price of certain designer brands increased, I noticed a substantial decrease in my willingness to purchase these items, opting instead for more affordable alternatives. This aligns with the characteristics of elastic demand: a high degree of sensitivity to price changes, availability of substitutes, and the goods being non-essential (Krugman & Wells, 2011). Luxury clothing's demand tends to decrease significantly as prices rise because consumers can delay or forego purchases or find less expensive substitutes, demonstrating elastic behavior.

Conversely, an example of an inelastic good is gasoline. Despite fluctuations in the price of fuel, my consumption habits have remained relatively unchanged. This is because gasoline is a necessity for daily commuting and has few immediate substitutes, especially for those who rely on personal vehicles for transportation (Mankiw, 2017). The demand for gasoline is typically inelastic because even substantial price increases do not drastically reduce consumption in the short term. Consumers tend to absorb price increases due to the essential nature of the good, reflecting its inelastic characteristics.

Understanding the elasticity of these goods is essential for businesses and policymakers. For instance, governments often impose taxes on inelastic goods like gasoline, knowing that demand will not significantly decline, thus generating revenue without greatly disrupting consumption patterns (Pindyck & Rubinfeld, 2018). Conversely, businesses dealing with elastic goods must price strategically to maintain sales volumes. Recognizing which goods are elastic or inelastic helps in forecasting market responses and designing effective economic policies.

References

• Krugman, P., & Wells, R. (2011). Principles of Economics (2nd European Edition). Pearson Education.
• Mankiw, N. G. (2017). Principles of Economics (8th Edition). Cengage Learning.
• Pindyck, R. S., & Rubinfeld, D. L. (2018). Microeconomics (9th Edition). Pearson.