A good or service may be a luxury item, a necessity, or a comfort to a consumer. The type of good or service affects the elasticity of demand as well. The demand increases, because they are more affordable to those who were unable to purchase them before. Suppose the prices of LED televisions decrease in price by 50%. Incomes and elasticity are related-as consumer incomes increase, demand for products increases as well.įor example, luxury goods have a high elasticity of demand because they are sensitive to price changes.Goods with many alternatives or competitors are elastic because, as the price of the good rises, consumers shift purchases to the substitute items.
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