Answer to Question #186498 in Economics of Enterprise for evans

Question

  A barber charges $10 for a haircut and he serves 20 people a day. He raises his prices to $12 for a haircut and only 14 people come in to get a haircut. Are haircuts elastic or inelastic?

Answer 1

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Haircuts are Elastic demand .

• Such a demand arises when the commodity price delivers a significant impact on the customer's demand. Hence:
• prices increase for just a little bit impacts consumers . consumers will/have stopped buying considerably and will wait for the prices get back to normal hence the numbers drop from 20 to 14 with increase in price from $ 10 to $ 12. As it can be postponed and it is not a must, it maintains an elastic requirement .Also an individual can wear their hair another way or receive a cut later.