Elasticity Of Demand And Supply: Two Characteristics Of Elasticity

Discussion 1: Elasticity of Demand and Supply

Select a product you use on a daily basis and discuss the determinants of price elasticity of demand for that product. Provide specific examples of characteristics of your chosen good to support your response

It is for certain that most buyers are likely to react strongly when the price of some commodities fluctuate. Among such commodities are the smartphones. Well, over the past few years, there has been a tremendous increase not only in the sales of the smartphones but also the companies’ that have ventured into manufacturing these gadgets. Each of these companies wants to dominate the market amid facing a stiff competition, and their demand elasticity is largely affected by their competitors

Provide at least two reasons why one would experience diminishing marginal utility for your example

In the diminishing marginal utility law, the value of a given product continues to decrease significantly as the product is being consumed. The diminishing utility can greatly be affected by overproduction where producers tend to produce certain products in bulk whereas the consumers only need a few of these products. This destabilizes the demand supply chain curves and often results in undesignated losses emanating from storage of inventories. Diminishing marginal utility often results due to satisfaction and price. If one took the first bar of chocolate, they certainly would feel good but upon taking another bar, they are likely to feel irritated and in some instances the consumers do not want to spend a lot meaning that they are bound to make more purchases of the same product.

Create a (very) brief, original scenario using two to three products of your choice that illustrates how consumer choice affects the demand of a

This is because they’re the end users, and producers aim at supplying them with goods and services that they have demanded. Let’s consider two items that are commonly used by consumers; food and clothing. These two commodities are largely dependent on the consumer’s choice. This means that a consumer can prefer a certain commodity to the other. Their choice will create a high demand in the market for that specific good, and this will consequently prompt the manufacturer to produce more to keep the balance. During the winter season, the consumers will demand heavy clothing to shield themselves from the freezing weather, apparel industries bridge the gap between supply and demand by producing heavy woolen sweaters and canvas for the people (Gorton,