Demand is price elastic if a change in price causes a bigger percentage change in demand. It will have a PED of greater than one. Example of elastic demand % change in Q.D – 60/110 = – 0.545 % change in price 15/65 = 0.23 In the above example, the PED = -2.36 Characteristics of …
A look at the different economic factors that determine the price of gold Essentially the price of gold is determined by: Supply of gold Demand for use in goods such as jewellery. Speculative demand to hedge against inflation and economic uncertainty. In early August 2011, gold touched $1,716.19. Adjusted for inflation, the record gold price …
Readers Question: Discuss the relationship between elasticity and market power’ in terms of the retail petrol market. And then it says ’use common determinant of both’, whatever that means? Demand for petrol is quite inelastic. If you have a car, there are not many alternatives to buying petrol. This is why the increased price of …
Champagne is a very good example of a luxury good. (a change in income causes a bigger % change in demand) Furthermore, supply of Champagne is limited to certain regions of France. With this monopoly power over supply, French wine producers have been able to set very high prices. Champagne can easily go for over …
OK, I have a question for you. This was the example which popped to mind as I was reading your entry. (price elastic products) Here in my Middle Eastern country, sheep are sold for meat. Each year, prior to the Festival of the Sacrifice (Muslim holiday where every family buys a sheep to butcher at …
Readers Question: When would you want to own a business that sells price-elastic products? Why? Price elastic products mean that if there is an increase in price, there will be a bigger % fall in demand. Therefore, with elastic goods, there is little incentive to increase the price because there will be a bigger % …
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