ipl-logo

Effect Of Price Elasticity Of Demand

1250 Words5 Pages

INTRODUCTION
Economists use a measure of responsiveness called elasticity. Elasticity means how much something will stretch or change in response to another variable. Basically, Elasticity is the ratio of the percentage change in a dependent variable to a percentage change in an independent variable. There are different kinds of economic elasticity. For example, price elasticity of demand, price elasticity of supply, income elasticity of demand, and cross-price elasticity of demand. But here we are focusing on the price elasticity of demand, so what does price elasticity of demand means: Price elasticity of demand is the most common measure used to determine consumers’ sensitivity to price. “Price elasticity of demand (PED) identifies the relationship between changes in quantity demanded and changes in price: the degree to which quantity demanded responds to a change …show more content…

Usually, Quantity demanded varies with the price, how much consumers are price sensitive to the cigarette demand and what are the factors which impact on the price elasticity of cigarette demand. Here we are discussing the five factors which effects the price elasticity of demand. These contains the prices of related goods (substitutes and compliments), income of the buyers, buyers’ expectations, the number of buyers, and buyers’ preferences. Briefly we are discussing the factors which has been playing a major role in regarding the increases of cigarette

Show More
Related

  • Ap Human Geography Chapter 4

    1270 Words  | 6 Pages

    Some examples that are inelastic are keyboards and pens. This concept of things being elastic or inelastic can also be incorporated into macroeconomics. Price elasticity of demand refers to the responsiveness of the consumers to a price change. For example some products that consumers are highly responsive to would be buying coffee at a coffee shop because a small price change can affect a large change in the quantity purchased. Since this product is highly responsive it correlates to this product being elastic.

    Read More

  • Year 11 Economics Definitions

    946 Words  | 4 Pages

    The price of a good rises from $4.00 to $4.50, and as a result, total revenue falls from $400 to $350. Is the demand for the good elastic, inelastic, or unit-elastic? The demand for the good is elastic because as the price of the good rises the total revenue falls. Good A has 10 substitutes, and good B has 20 substitutes.

    Read More

  • Essay On Discount Canadian Cigarettes

    315 Words  | 2 Pages

    If cigarettes are offered at economic rates, users are able to save a considerable amount of money in the long run. For these reasons discount Canadian cigarettes are profitable to the manufacturer, as well as the consumer. Most discount Canadian cigarettes are bulk order purchases. The discount rates vary depending upon the size of the order. Retailers also make a considerable profit.

    Read More

  • CVS Caremark Health Corporation: Company Overview

    1440 Words  | 6 Pages

    Goods with a price elasticity greater than 1 are said to be elastic. ”(Helicon, 2014) Regardless of the declining utilization of cigarettes they are inelastic. Regardless of how high the cost is, consumers that smoke will still consume them because it is not easy to break the nicotine addition. As seen in figure 1, although demand and sells were decreasing for cigarettes it was an increase for the substitute e-cigarettes.

    Read More

  • Naked Economics Chapter 4

    547 Words  | 3 Pages

    This week in chapter six of the book, Economics, written by McConnell, Brue, and Flynn, I have learned about price elasticity of demand and supply, cross elasticity, total revenue, and income elasticity of demand. Through this week I believe the most important concepts are elasticity of supply and demand. Elasticity of demand is the sensitivity of a price change of a product. Elasticity of demand can be influenced by substitutability, proportion of income, luxuries versus necessities, and time. Price elasticity of supply is the responsiveness of producers to a price change in a product.

    Read More

  • Market One: NFL Ticket Or Dish Network

    619 Words  | 3 Pages

    What I have just provided addresses the responsiveness, as our reading on page 415 points out, “Price elasticity of demand (Ep) The responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price. To determine elasticity of demand it is important consider, availability of substitutes, Short-run versus long run, Percentage of income spent on the product.

    Read More

  • Effects Of Slavery In Jamestown

    232 Words  | 1 Pages

    During 1700’s the European demand for tobacco increased. When tobacco became higher in demand it cause the demand for

    Read More

  • Electronic Cigarette Effects On Children

    162 Words  | 1 Pages

    They only want money and know by having flavors like strawberry, bubble gum and so many more that are advised to the young adults. In this article Electronic Cigarette and Traditional Cigarette Use among

    Read More

  • Coca Cola Demand Curve

    1041 Words  | 5 Pages

    DEMAND CURVE Demand is defined as the different quantities people are willing to buy at different prices. As the price of good increases the demand decreases and vice versa. The law of demand states shows an inverse relationship between price and quantity demanded. The demand curve shows the relationship between the quantity of a good a consumer is willing to buy and the price of the good. The equation for that shows the relationship between the quantity demanded and price is as given below: QD =

    Read More

  • Cigarette Smoking In Indonesia

    1095 Words  | 5 Pages

    1.1 Background Indonesia is one of the developing countries that have high levels of consumption and production of cigarette. Variation product and price cigarettes cause Indonesia has become one of the producers and consumers cigarette the largest in the world (Anies, 2006). According to the Director of the Directorate General of Customs and Excise, Frans Rupang, permitting the establishment of a cigarette production is relatively easy. Now we have at least 3,800 cigarette factories, including home-based classes. The amount was the largest in the world (http://bisniskeuangan.kompas.com accessed 25 April 2015).

    Read More

  • E-Cigarette Reflection

    385 Words  | 2 Pages

    This reflection paper is going to focus mainly on the use of e-cigarette among many American today and also how it has been replaced as traditional cigarette over the past few years. For the past years, e-cigarette has been a part of American life and continue to grow as time goes by. E-cigarette is a form of cigarette that is powered by a battery, that is also known as a vaporizer. Many believe that e-cigarette helps limit the feeling of smoking a traditional cigarette each day without a combustion of tobacco.

    Read More

  • Cause And Effect Essay About Smoking

    974 Words  | 4 Pages

    Secondly smoking approximately result in 3,000 lung cancer deaths of non-smokers which is given off by the end of the burning cigarette and by the smokers exhalation. REASONS OF SMOKING 1) Youngsters try to look “cool” 2) Smoking acts as a stress reliever. 3) To control their weight. 4) Addiction 5) Peer pressure 6) Experimentation/ Adventure 7) Marketing of tobacco companies 8) Social Integration 9) To think Properly 10) Addiction SMOKING KILLS

    Read More

  • Toyota General Environment Analysis

    1506 Words  | 7 Pages

    Price and demand of an item is significant viewpoint which must be considered by Toyota in promoting economy as price and demand impact purchaser what to purchase. Customer’s demands all the more in lower price and less at higher price. Price elasticity of demand is a measure of the greatness by which customers modify the amount of some item that they buy in light of progress in the price of that item Boyes and Melvin (2012). Price elasticity of demand will help Toyota to decide the amount an

    Read More

  • Smoking Informative Speech

    882 Words  | 4 Pages

    Smoking has been a long time habit round the world. However, in the past, smoking cigarette was very popular and known to be a cool recreational drug, and was widely accepted by the community across the world. Today smoking has been less widely accepted and more restricted because of the many health risks that are linked to smoking cigarette. These days, people are well educated and more knowledgeable about the health risks of smoking.

    Read More

  • Cigarette Life Cycle Analysis

    1098 Words  | 5 Pages

    Goal Intended application This project aims to evaluate the environmental impacts of processed tobacco and cigarette paper production starting from acquisition of raw materials leading up to the product use by the consumer. This life cycle assessment can be used by a hypothetical health organization to educate people addicted to tobacco by underlying in detail the various health and environmental effects caused by cigarette production and consumption. Reason

    Read More

More about Effect Of Price Elasticity Of Demand

Open Document