Essay Examples on Touro University Nevada

Elasticity Managers of a business would like to estimate the Demand

Elasticity Managers of a business would like to estimate the demand for their products in the future thus they use the concept of the elasticity of demand Gillespie 2014 which will lead to the definition of elasticity itself Mankiw and Taylor define elasticity as the measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants Mankiw and Taylor 2011 pp 94 We can call a price as a price elastic when it has a value that is higher than 1 which means that the percentage change in the quantity demanded is more than the percentage change in price Gillespie 2014 pp 71 that can be explained as when the price goes down the total revenue goes high and vice versa For instance daily express Tesco bread and kit kat chocolate bar The common factor among these products is that an increase in the price a higher decrease in demand While an inelastic price which has a value that is less than 1 can be defined as when the percentage change in the quantity demanded is less than the percentage change in price Gillespie 2014 pp 71 which can be explained by the fact that whenever the price goes high the total revenue goes down and vice versa 



2 pages | 406 words
Save