Elasticity :: Economics, Price

IntroductionElasticity is maven of the most important theories in economics and it is a measure of reactivity (Baker, 2006)i. There are mainly two types of crack, the ginger nut of exact which includes monetary value elasticity of demand, income elasticity of demand, and cross elasticity of demand as hygienic as elasticity of supply (McConnell, Brue, & Flynn, 2009)ii. The degree to which a demand or supply curve reacts to a change in terms is the curves elasticity (Lingham, 2009)iii. Elasticity varies among products because some products may be more essential to the consumer. Consumer equipment casualty elasticity plays an important role in the lives of consumers. The price elasticity of demand is the sensitivity of the demand for a product when its price changes (McConnell, Brue, & Flynn, 2009)iv. Cafes like Panera dent refuses payments from customers and politely asked them instead to take what you need, and leave your fair share (Strom & Gay, 2010)v, resulting in more peop le getting goods like food at a fair price that they are bequeathing to pay. Based on the income elasticity of demand, consumers abide get a better and healthier life as they will buy things with better quality as their income rises. People will go to Italiannies for pizza and not to Pizza Hut as Italiannies offers a better, tastier, healthier and wider variety of choices, even when it is more expensive. With cross elasticity of demand, consumers place get the same quality product at a cheaper price as the rivalry between substitute goods will result in price reduction or improved quality. Consumers get to travel by MAS Airlines at a cheaper price as the rivalry between MAS and new(prenominal) airline companies has caused its price reduction (Gunasegaran, 2011)vi. Consumers with a low budget can also buy what they need. Consumers can get more value from a package offer when buying complementary goods as they go together, for example McDonalds McValue Lunch which comprises of a burger, fries, and soft drink, all for only RM5.95 forwards (My Food Fetish, 2009)vii. With this, consumers can get convenience when buying certain products. crinkleElasticity is also prominent to businesses. The price elasticity of demand is precise important for companies to determine the price of their products and their total sales and revenue. Newell showed that by film editing the price of the Left 4 Dead game in half to $25 during a Valve promotion, its sales increased by 3000 percent (Irwin, 2009)viii.