Acc212 Unit 2 Elasticity

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Microeconomics ECON212 -1504B-01
Instructor: Joseph Parisi
Unit 2- Elasticity
Amanda Kranning
November 2015

In the laws of economics, when the price of an item goes up, the quantity of demand will decline. Elasticity becomes an integrant part by determining the response of this occurrence. The measurement in change in the quantity demanded in response to change in price is call elasticity for demand. By calculating the coefficient of price, elasticity of demand by the formula the determining factor is found.
E_p= Change in quantity demanded
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Change in Price

When a good or service is considered elastic, the percentage change in quantity demanded brought about by a price change is greater than 1. This means the quantity demanded is very receptive to price
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During warmer months, there is a higher demand due to summer vacationers. With the off-season months, beachfront properties lower prices in order to dwell up continuing business. This results in elastic characteristics however, during warmer months the prices go up with a steady increase in visitors making this inelastic. Gourmet Coffee Gourmet coffee, classified as a niche market is an inelastic product. When the price of the coffee increases within reason, the demand does not change. Take in mind the regular customer who comes in every morning for their cup of coffee. The price increase is not going to effect the decision of the customer without there being a remarkable increase in price. This will continue business with a lack of decrease in demand.
Gasoline
As an inelastic product, gasoline always is needed. If the price of gasoline rises by 1% and the quantity demanded falls by 0.2%, gasoline price elasticity of demand is -0.2. (Kevin, 2010) As mentioned above, due to the lack of substitutes for gasoline the necessity will still be there.
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