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Is the concept of price elasticity anyway useful to an aspiring entrepreneur when deciding on the goods to produce?
Yes, in fact, the price elasticity of a good is very useful when deciding on which goods to produce. The more inelastic the good, the more power the producer has in setting the price level of that good.
Take, for example, the pharmaceutical industry. Medicine is an inelastic good because no matter what the price is, people will still need the medicine that they purchase. So if a pharmaceutical company has the only product of its kind on the market they have an almost monopolistic control over that particular market and they are able to set almost any price level they wish. In this case, these producers are price setters.
If the price of a good is elastic, like milk for example, producers have less control over the market. If the price of milk were to increase, then consumers would substitute away from milk to some other commodity. Therefore, producers in the milk industries are price takers, because they take whatever price is already on the market, and they sell their products for that price.
So, for an aspiring entrepreneur, knowing what kind of product is elastic and what kind of product is inelastic is very useful. If they really want to make a good deal of money, it would be wise to choose a product that is relatively inelastic. This was a change in price will not greatly affect the quantity of their good that is sold.
What else can I help you with?
Why is elasticity of demand a fine theoretical concept of economists but difficult for marketers to use in practice?
it is what elasticity of demand
What are the benefits of elasticity to government?
How can government benefit from the elasticity concepts? Analyse the various economic policies which will benefit from the concept.
Why elasticity concept is required by managers?
Elasticity helps to find optimal production quantities and thus optimal profits.
Who evolved concept of elasticity of demand?
The concept of elasticity of demand was primarily evolved by economists Alfred Marshall and Arthur Cecil Pigou. Marshall introduced the idea in his seminal work "Principles of Economics" in the late 19th century, where he defined elasticity as a measure of how quantity demanded responds to price changes. Pigou later refined the concept, helping to establish it as a fundamental principle in microeconomic theory.
What came up with elasticity?
Elasticity, in economic terms, refers to the responsiveness of one variable to changes in another variable, typically used to measure how the quantity demanded or supplied of a good responds to changes in price. The concept was developed in the 19th century, with significant contributions from economists like Alfred Marshall, who formalized the concept in his work on supply and demand. Elasticity can be categorized into different types, such as price elasticity of demand, income elasticity, and cross-price elasticity, each providing insights into consumer behavior and market dynamics.
Demonstrate the Relationship between elasticity and totoal revenue?
how government use the elasticity concept to genrate revenue
Why is elasticity of demand a fine theoretical concept of economists but difficult for marketers to use in practice?
it is what elasticity of demand
What are the benefits of elasticity to government?
How can government benefit from the elasticity concepts? Analyse the various economic policies which will benefit from the concept.
Why elasticity concept is required by managers?
Elasticity helps to find optimal production quantities and thus optimal profits.
Who evolved concept of elasticity of demand?
The concept of elasticity of demand was primarily evolved by economists Alfred Marshall and Arthur Cecil Pigou. Marshall introduced the idea in his seminal work "Principles of Economics" in the late 19th century, where he defined elasticity as a measure of how quantity demanded responds to price changes. Pigou later refined the concept, helping to establish it as a fundamental principle in microeconomic theory.
Where is lake maricibo?
with example explain the concept of of elasticity of supply and interpretating the result graphical and descuse the relationship between price elasticity and suppliers total revenue
What came up with elasticity?
Elasticity, in economic terms, refers to the responsiveness of one variable to changes in another variable, typically used to measure how the quantity demanded or supplied of a good responds to changes in price. The concept was developed in the 19th century, with significant contributions from economists like Alfred Marshall, who formalized the concept in his work on supply and demand. Elasticity can be categorized into different types, such as price elasticity of demand, income elasticity, and cross-price elasticity, each providing insights into consumer behavior and market dynamics.
Why is elasticity an important concept for a business like beachfront properties?
Elasticity an important concept for a business like beachfront properties because it determines how much the value of the property could potentially fluctuate. If the price goes down, demand increases.
Explain the concept of income elasticity of demand and how it is calculated?
When you have less income you tend to consume less.
The concept used by economics to indicate the response of quantity demanded to a change in price is known as?
elasticity
What is meant by concept of elasticity of demand?
The degree of responsiveness of change in demand as a result of change in its price is known as elasticity of demand. I mathematical language we can say that; Elasticity of demand = %age change in Quantity Demanded DIVIDED BY %age change in the Price.
What makes elasticity a physical property?
The concept of elasticity is a physical property because force can mutate a physical item and then when that force is removed and elastic object returns to its original form.æ Using elasticity to explain non physical phenonmena is a misnomer.
