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fast food is extremely price elastic, the slightest change can affect sales significantly.
think of the fast food restaurent chains today, or even the local night time venues; if one becomes significantly cheaper (especially in the current economic climate) the majority will switch despite personal preferences.
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Is price elasticity of demand considered elastic or inelastic with food?
price elasticity of food would be inelastic, as there are no substitutes and food is a necessity.
Suppose good food's supermarket raises the price of its steak and finds its total revenue from steak sales does not change this is evidence that price elasticity of demand for steak is?
elastic
1 Define elasticity of demand Provide an example?
Responsiveness of the demand for a good or service to the increase or decrease in its price. Normally, sales increase with drop in prices and decrease with rise in prices. As a general rule, appliances, cars, confectionary and other non-essentials show elasticity of demand whereas most necessities (food, medicine, basic clothing) show inelasticity of demand (do not sell significantly more or less with changes in price).
What is the difference between price elasticity and cross elasticity of demand?
Cross price elasticity of demand measures how much demand of one good, say x changes when the price of another good, say y changes, holding everything else constant. For example, you can measure what happens to the demand of bread when the price of milk changes. The cross price elasticity is calculated as the percentage change in the quantity demanded of good x divided by the percentage change in the price of good y. If the cross price elasticity is negative, then we call such goods Complements (example: pizza and soft drinks -- they are consumed together). If the cross price elasticity is positive, then we call such goods Substitutes (example: pizza and burgers -- you usually consume either or). The income elasticity of demand measures the change in the quantity demanded of some good, when the income changes, holding everything else constant. For example you can measure what happens to the demand for expensive red wine when income increases. The income elasticity is calculated as the percentage change in the quantity demanded of the good divided by the percentage change in income. If the income elasticity for a good is positive we call them normal goods. It can be between 0 and 1, and we call it income inelastic demand for goods such as food, clothing, newspaper. If it is above 1, we call it income elastic demand. Examples are the red wine, cruises, jewelry, art, etc. If the income elasticity is negative, this means that as income increases, the quantity demanded for those goods actually decreases, we call those goods inferior goods. Examples are "Ramen noodles", cheap red wine, potatoes, rice. etc.
What are the uses of price elasticity of demand to the business firms and to the government?
Elasticity measures help the sales manager in fixing the price of his product. The concept is also important to the economic planners of the country. In trying to fix the production target for various goods in a plan, a planner must estimate the likely demand for goods at the end of the plan. This erequires the use of income elasticity concepts.The price elasticity of demand as well as cross elasticity would determine the substitution between goods and hence useful in fixing the output mix in a production period. The concept is also useful to the policy makers of the government, in particular in determining taxation policy, minimum wages policy, stabilization programmer for agriculture, and price policies for various other goods (where administered prices are used).The managers are concerned with empirical demand estimates because they provide summary information about the direction and proportion of change in demand, as a result of a given change in its explanatory variables. From the standpoint of control and management of external factors, such empirical estimates and their interpretations are therefore, very relevant.
Is price elasticity of demand considered elastic or inelastic with food?
price elasticity of food would be inelastic, as there are no substitutes and food is a necessity.
Suppose good food's supermarket raises the price of its steak and finds its total revenue from steak sales does not change this is evidence that price elasticity of demand for steak is?
elastic
1 Define elasticity of demand Provide an example?
Responsiveness of the demand for a good or service to the increase or decrease in its price. Normally, sales increase with drop in prices and decrease with rise in prices. As a general rule, appliances, cars, confectionary and other non-essentials show elasticity of demand whereas most necessities (food, medicine, basic clothing) show inelasticity of demand (do not sell significantly more or less with changes in price).
What is the difference between price elasticity and cross elasticity of demand?
Cross price elasticity of demand measures how much demand of one good, say x changes when the price of another good, say y changes, holding everything else constant. For example, you can measure what happens to the demand of bread when the price of milk changes. The cross price elasticity is calculated as the percentage change in the quantity demanded of good x divided by the percentage change in the price of good y. If the cross price elasticity is negative, then we call such goods Complements (example: pizza and soft drinks -- they are consumed together). If the cross price elasticity is positive, then we call such goods Substitutes (example: pizza and burgers -- you usually consume either or). The income elasticity of demand measures the change in the quantity demanded of some good, when the income changes, holding everything else constant. For example you can measure what happens to the demand for expensive red wine when income increases. The income elasticity is calculated as the percentage change in the quantity demanded of the good divided by the percentage change in income. If the income elasticity for a good is positive we call them normal goods. It can be between 0 and 1, and we call it income inelastic demand for goods such as food, clothing, newspaper. If it is above 1, we call it income elastic demand. Examples are the red wine, cruises, jewelry, art, etc. If the income elasticity is negative, this means that as income increases, the quantity demanded for those goods actually decreases, we call those goods inferior goods. Examples are "Ramen noodles", cheap red wine, potatoes, rice. etc.
What are the uses of price elasticity of demand to the business firms and to the government?
Elasticity measures help the sales manager in fixing the price of his product. The concept is also important to the economic planners of the country. In trying to fix the production target for various goods in a plan, a planner must estimate the likely demand for goods at the end of the plan. This erequires the use of income elasticity concepts.The price elasticity of demand as well as cross elasticity would determine the substitution between goods and hence useful in fixing the output mix in a production period. The concept is also useful to the policy makers of the government, in particular in determining taxation policy, minimum wages policy, stabilization programmer for agriculture, and price policies for various other goods (where administered prices are used).The managers are concerned with empirical demand estimates because they provide summary information about the direction and proportion of change in demand, as a result of a given change in its explanatory variables. From the standpoint of control and management of external factors, such empirical estimates and their interpretations are therefore, very relevant.
What Distinction between price elastic and price inelastic?
Elasticity is "a measure of responsiveness that tells us how a dependent variable such as a quantity responds to a change in an independent variable such as price." Basically, that means that elastic product's demand is affected by price and an inelastic product's demand is unaffected by price.For example: if a product is elastic, the price goes up and demand goes down, or the price goes down and demand goes up. Examples are electronics, candy and junk food, and even cars.If a product is inelastic, the demand will stay the same no matter the price. Examples are medical supplies.
Define elastic demand?
Elasticity is the percentage change in one variable resulting from a percentage change in another variable. Thus, the price elasticity of demand is the percentage change in quantity demanded of a good resulting from a percent change in its price. Elastic demand means that the percentage change in quantity demanded of the good is greater than the percentage increase in price. This means that the demand for a good is very sensitive relative to price. Therefore, if the price increases by one dollar the quantity demanded for that good will decrease by a lot and if the price decreases by one dollar the quantity demanded for that good will increase by a lot. The determinants of price elasticity of demand are: substitutes of the good, percentage of income the good's price, and the need of the good. Substitutes are other goods that have the same or similar function to the particular good; if there are many substitutes then the price will be elastic in which the primary good becomes too expensive consumers will switch their demand to a close substitute, and if there are not many substitutes the price will be inelastic in which the primary good becomes very expensive consumers will have to buy that good no matter what. If the price of the good is a large percent of the consumer's income the elasticity of demand will be high, since the consumer will not want to spend the majority of their income on one good. If the good is a necessity, for example food, then people will have to buy it no matter the price therefore it will be very inelastic. If the good is a luxury good like a yacht then the demand elasticity will be very elastic.
What products are elastic?
It depends a great deal on how widely you define the product. For example, the demand for "food" is completely inelastic, since there are no substitutes for "food". However, demand for apples will be far more elastic than the demand for food, since if the price of apples increases people can switch quite easily to a cheaper fruit. It is difficult to generalise what items are elastic, since not all items within the same group have equal "value" - brand loyalty for example will decrease elasticity for certain items. This means that, if I were to say that demand for baked beans was elastic, you could point out that Heinz baked beans experience far lower levels of price elasticity than other brands of baked beans. However, generally (very generally), unbranded/supermarket branded food items, when not defined too widely, will experience an elastic "price elasticity". Contrary to many expectations, fuel actually does seem to be price elastic - at least, to a certain level. Even though there are very few good substitutes for petrol etc... consumption does decrease when prices are raised.
What is elasticity of demands?
How much demand of a product goes up or down depending on the price. Elastic demand changes greatly as price changes - for normal goods, as the price goes up, demand drops. Demand for things like non-staple food - like cookies - is elastic. If cookies cost 50 cents a box, there might be huge demand for them. But if that price goes to $10 a box, if the price were elastic, the demand would be much lower. For an inelastic demand curve, people's demand changes little as prices change. THese are goods for which there are few substitutes. Things like gasoline have relatively inelastic demand curves - people will slow down their use/demand of gasoline a bit as prices go up, but a certain level of gasoline consumption is going to exist regardless of price. People are simply going to pay what they have to to get it.
What are examples of five products whose demand is price elastic and five products whose demand is price inelastic?
narcotics, food, gas
Is the price and demand for junk food elastic or inelastic?
elastic
Price inelasticity of demand?
The elasticity of demand is related to the slope of the demand curve, but is not the same. The steeper the demand curve is the more the consumers "must" have the good. Lifesaving medicine, for example, has a very steep demand curve because producers can raise the price without appreciably decreasing the quantity demanded. Goods like this are inelastic. Goods with many alternates, like potato chips, are elastic. If the price is raised, consumers will purchase alternates instead, like pretzels.
