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April 23, 2014

Homework Help: economics

Posted by Keela on Monday, February 5, 2007 at 8:04pm.

Identify three goods each for which your demand is (a) elastic or (b) inelastic. What accounts for the differences in elasticity?

Thank you for using the Jiskha Homework Help Forum. Let me help by explaining the difference between elastic and inelastic demand.

elastic demand means the demand changes when the price changes. For example, I want 10 but the price goes up so now I want only 5.

inelastic demand means the quantity demanded does not change much when the price changes. For example, I want 10 but the price goes way up. However, I still order 10.

Now you pick!

SraJMcGin - an interesting, but not completely correct, description of elasticity.

Elasticity of demand is the (percentage change in quantity demanded) divided by the (percentage change in price). That is:
E=((%dQ)/(%dP)). (Here, d means change)

E is always negative, but we usually express E in absolute value terms (i.e., as a positive number)

We say something is elastic when E is greater than one (absolute value) meaning that if price changes by x percent, consumption will change by more than x percent. Many food products (beef, chicken, bananas) are thought to have elastic demands.

Conversely, if the E is less than one, the elasticity is inelastic. Cigarettes and gasoline fall into this category.

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