Question

A) Is the demand for Dell computers to be more or less price-elastic than the demand for all Computers? Explain

B) Compare the demand curve of Dell computers and the demand curve for all computers, which one is steeper?

Answer 1

A) The demand for Dell computers would be less price-elastic compared to the demand for all Computers. The main reasons for this are:

-- The Dell computers consumers are likely to be brand conscious thus would have rigid demand patterns and limited choices. On contrary, computers consumers would consider the usage as well as the utility of the machine. Any brand that offers a best price to satisfy both the utility need and the demand would be considered; thus demand for computers would be more price-elastic.

-- Consumers in the Dell computers are less flexible because of brand loyalty; while the consumers in the computer market are more flexible thus computer's demand would be more price-elastic.

B) Demand curve for Dell computers as Graph-1; and the demand for computers as Graph-2 is enclosed. As demand for computers would be more elastic compared to the demand elasticity for Dell computers, thus Dell computers demand curve would be steeper