I purchased a pair boot in the past month from a shoe store describe how each of the 4 factors contributed to the elasticity of the good.
To analyze how each of the four factors contributed to the elasticity of the boots, we need to understand what these factors are and how they affect the price and demand for the boots.
1. Availability of substitutes:
Consider if there are similar boots available in the market. If there are numerous substitute options, the elasticity of the boots increases. Consumers have a higher tendency to switch to alternatives if the price of the purchased boots increases. On the other hand, if the boots are unique or have limited substitutes, the elasticity may decrease, as consumers may be less likely to switch to other options.
2. Time:
The time factor refers to the duration since the purchase. Immediately after purchasing the boots, the elasticity may be low, as consumers tend to be less responsive to price changes. However, over time, it is expected that elasticity will increase. If prices rise, consumers may consider delaying or avoiding future purchases of the same boots until prices decrease or until they find an alternative, therefore increasing elasticity.
3. Importance of the boots in the buyer's budget:
If the boots represent a significant portion of the buyer's budget, the elasticity tends to be higher. This indicates that consumers are more sensitive to price changes. In contrast, if the boots represent only a small portion of the buyer's budget, the elasticity may be lower as consumers may be less sensitive to price changes.
4. Brand loyalty:
Brand loyalty refers to the attachment and preference consumers have for a particular brand. If there is strong brand loyalty for the boots, the elasticity may be lower. Consumers who have a strong preference for a specific brand are less likely to switch to alternatives even if the price increases. However, if there is weak brand loyalty, the elasticity may be higher, as consumers would be more inclined to switch to other brands or substitutes if the price increases.
By considering these four factors - availability of substitutes, time, importance in the buyer's budget, and brand loyalty - and analyzing their impact on the boots you purchased, you can understand how each factor influenced the elasticity of the good.