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Price Elastic Products

This paper explains when it would be beneficial to own a business that sells price elastic products.

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Price Elastic Products Price elastic products are products whose price can fluctuate up ordown I would want to own a business that sells price elastic products ina market where either of two situations prevailed-an imminent rise inprices or an imminent decline in prices For example if DVDs were aboutto become obsolete I would want to own a DVD company that could lower thepricing to sell out my remaining inventory On the other hand if thefailure of some other technology meant that DVD

For example, if DVDs were aboutto become obsolete, I would want to own a DVD company that could lower thepricing to sell out my remaining inventory. Thus, for maximum benefit of price elasticity, ithas to be coupled with other factors such as a good economic environment,consumer confidence, and strong reasons to buy now. I would want to own a business that sells price elastic products ina market where either of two situations prevailed-an imminent rise inprices or an imminent decline in prices. Retrieved on July 16, 2 9 from: http://www.allbusiness.com/finance-insurance/credit- intermediation-related-activities/918585-1.html Price Elasticity of Demand. Macinac Center. 3). People are going to buy salt and bread regardless of what theycost, so changes in pricing of those commodities will not have much effecton profits. Price elasticity is gauged on a continuum, with a price elasticityhigher than -1 deemed "elastic" and a smaller price elasticity than -1deemed to be "inelastic (Anderson, McLellan, Overton, & Wolfram, 1997).The least elastic goods are those that are vital for everyday living andthat do not have many substitutes, such as staple foods like salt or bread,while the most elastic goods are those that are expendable or luxuryextras, such as designer clothes (Anderson, McLellan, Overton, & Wolfram,1997). November 13. 3) points out that "When we measure elasticity, whatis being measured is the responsiveness to demand to its determinants, suchas income and other goods." She goes on to explain that this generatesincome elasticity and "cross price elasticity of demand" and that "Incomeelasticity measures the responsiveness of demand to a change in income"(Barker, 2 , p. Allbusiness. Barker (2 , p. Elastic or inelastic? This is a delicate balancing act, however.For example, prices have gone down on many items this year, but in thelagging economy, people are reluctant to spend money even though the dealsare exceptionally good. (2 ). Retrieved on July 16, 2 9 from: http://www.mackinac.org/article.aspx?ID=1247Barker, J. ReferencesAnderson, P.L., McLellan, R.D., Overton, J.P., Wolfram, G.L. On the other hand, when prices go down, people tend to buy moreof the lower-priced products. Price Elastic Products Price elastic products are products whose price can fluctuate up ordown. (1997). Inelastic prices cannot take advantageof economic surges that allow elastic prices to go up and earn moreprofits. Products that are extras and not really needed are always adebatable purchase, however, so pricing will have a major impact onpurchases in that category. When incomesgo up or down, prices will follow. On the other hand, if thefailure of some other technology meant that DVD technology was about toenjoy a huge resurgence of popularity, I would want a company that couldraise its prices to take advantage of the resurgence. Looked at from this perspective, it is clear thatthe entire economic environment is part of price elasticity. Unfortunately,however, the "law of demand" dictates that when the price goes up, fewerconsumers will purchase the item (Anderson, McLellan, Overton, & Wolfram,1997).

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