Question

I need help with this discussion assignment, please answer the following question at least three paragraphs with your own thought idea. Read the following examples. Which of the products are relatively elastic, and which are relativity inelastic and why? Refrigerator, Gasoline, internet service, Pair of jeans, Diamond, Scarves, Orange juice, Salt, Computer and Concert tickets

Answer 1

Elasticity is a general measure of how sensitive one variable is to any other variable, and it is expressed as the ratio of percentage changes in each variable: %∆Quantiy /%∆ Price
When we want to describe the sensitivity of demand, we need to recall the specific units in which Qunatity and Price were measured. Economists, therefore, prefer to use a gauge of sensitivity that does not depend on units of measure. That metric is called elasticity. In the case of own- price elasticity of demand, that measure is illustrated as follows :

This equation expresses the sensitivity of the quantity demanded to a change in price. This represents the good’s own- price elasticity and is equal to the percentage change in quantity demanded divided by the percentage change in price.
When the magnitude of the own- price elasticity coefficient has a value of less than one, demand is said to be inelastic. When that magnitude is greater than one, demand is said to be elastic. And when the elasticity coefficient is equal to negative one, demand is said to be unit elastic, or unitary elastic.
For goods such as refrigerator, Gasoline, internet service, Pair of jeans, Diamond, Computer will be relatively elastic because with the change in the price the quantity demanded will be affected.
For goods like Orange juice, Salt, and Concert tickets Scarves, will be relatively inelastic because these are essential goods and their demand may not be affected much with prices changes.