Answer to Question #172373 in Microeconomics for Salman Pasha

Question

There are various examples of elasticity in our daily life. Write practical examples that impact on our life.

Answer 1

Elastic demand.

Household chemicals. There are many similar products, so consumers have many choices. In this case, demand strongly depends on the price, therefore, it is subject to strong changes when prices fluctuate. An increase in price will lead to the purchase of an analog product, a decrease will increase the volume of sales.

Luxury goods, jewelry, delicacies. Demand responds most actively to price changes by attracting consumers from other target segments.

Electronics, furniture, and household appliances. A typical example of demand elasticity. The cost of such goods is tangible for the household budget, therefore, a decrease in prices leads to a sharp increase in sales volumes due to deferred demand. Higher prices, on the contrary, lead to an increase in deferred demand and a decrease in sales volumes.

Inelastic demand.

Utilities. The uniqueness of the product, while it is extremely necessary at any point in time, therefore, price changes do not affect demand. Commitment to a specific brand of goods A person does not want to look for a replacement for a specific brand, so an inelastic demand arises.

A group of hard-to-replace products (gasoline, light bulbs, etc.). Consumers have practically no opportunity to choose substitute products, therefore, price changes have little effect on the volume of demand.