Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Price-Elastic Products - Essay Example

Comments (0) Cite this document
Price elastic products are those whose rise in price will cause a remarkable decrease in demand. A product becomes price elastic when there is a severe competitive market. In other words, when oligopoly exists in the market then scope for increasing price of the product is very less…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.7% of users find it useful
Price-Elastic Products
Read TextPreview

Extract of sample "Price-Elastic Products"

Running head: PRICE-ELASTIC PRODUCTS PRICE-ELASTIC PRODUCTS INTRODUCTION Price elastic products are those whose rise in price willcause a remarkable decrease in demand. A product becomes price elastic when there is a severe competitive market. In other words, when oligopoly exists in the market then scope for increasing price of the product is very less. This is just the opposite as in the case of monopoly, where a firm could put up prices and make profits. Having price elastic good doesn't mean you are unprofitable (e.g. electronic goods). Similarly, having inelastic demand goods doesn't make a firm profitable always. The key is whether revenue is greater than costs. (Investopedia, 2003)
I would select price elastic products mainly to increase market share and increase the sales of the product. As the price of a product rises, consumers will usually demand a lower quantity of that good, perhaps by consuming less, substituting other goods, and so on. Conversely, as the price of a good falls, consumers will usually demand a greater quantity of that good, by consuming more, dropping substitutes, and so forth.
Consider the example of cell phone market. It is one of the best examples of price elastic products. We can see lots and lots of new cell phone models flooding the markets from different makers. There is no possibility of increasing the price of cell phone due to high competition. On the other hand, more advanced cell phone models with significantly advanced features come at a very low cost. In fact, the cost of the cell phones is a constant decreasing curve. A slight increase in the cell phone leads to a great decline in the market demand.
Fig.1.1 Graph of Price vs Qty. demanded for (a) inelastic and (b) elastic goods
(Jason Welker, 2008)
The amount of change in demand corresponding to change in price for price-elastic as well as price-inelastic products can be well understood with the help of these graphs (Fig.1.1).
Consider a price-inelastic product (e.g. Petrol). When the price is raised from P2 to P1, the amount of change in demand (Q2-Q1) is very small compared to price rise (P1-P2). This is the case of monopoly.
Now, consider a price-elastic product (e.g.). The competition for market share is very high in this case. So, a small rise in price (P1-P2) may lead to a considerable decline in demand (Q2-Q1). The vice-versa is also true. It means that when a firm decreases its price from P1 to P2, there is a significant increase in demand and hence the market share. This is the main reason for the reduction in the prices of electronic goods and other price-elastic products.
Economics Basics: Elasticity, 2003. Investopedia. Retrieved 14 May 2008 from
Janson welker, 2008. Price Elasticity of Demand. Welker's Wikinomics. Retrieved 14 May 2008, from Read More
Cite this document
  • APA
  • MLA
(“Price-Elastic Products Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Price-Elastic Products Essay Example | Topics and Well Written Essays - 500 words. Retrieved from
(Price-Elastic Products Essay Example | Topics and Well Written Essays - 500 Words)
Price-Elastic Products Essay Example | Topics and Well Written Essays - 500 Words.
“Price-Elastic Products Essay Example | Topics and Well Written Essays - 500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Price-Elastic Products

How does the relative distance traveled by food products impact the price of those food products

...? How does the Relative Distance Traveled by Food Products Impact the Price of those Food Products? Inserts His/Her Inserts Grade Course Customer Inserts Tutor’s Name 25 February 2012 Table of contents Introduction …………………………………………………………………………….3 Method of Data Collection ……………………………………………………………..3 Research Assignment……………………………………………………………………3 Data Presentation and Processing…………………………………………………..…...7 Interpretation and Analysis………………………………………………………………8 Conclusion and Evaluation……………………………………………………………..10 Recommendation……………………………………………………………………….11 References………………………………………………………………………………12 Appendices……………………………………………………………………………..14 Introduction Food stores sell their food products at different prices. The research focuses on the effect...
10 Pages(2500 words)Research Paper

Elastic and Inelastic Traffic

...? Elastic and inelastic traffic Overview Our organization under study is a technologically driven company having ten departments which are separately paced but within equal geographical distances. It has a total number of 1000 employees all of whom are served by a common data center of twenty backend enterprise servers. The current network topology is characterized by network drawbacks of high levels of packet loss and out of order packets as a result of routers being oversubscribed in a shared network hence giving rise to dropping or delayed packet delivery. In addition, throughput has also been identified as a major problem in the network connectivity. This project is hence aimed at addressing these issues and affirming a corrective...
3 Pages(750 words)Assignment


... is the utmost factor which determines how the commodity is accepted in the market and in which market segment that product will have to be sold. It is also used by business when they are developing the marketing plan for the products. Understand price In our ordinary life we use the term price in order to refer to the amount or the quantity of payment that is made in order to acquire something. In this regard it is taken as a form of compensation that is given in exchange for something. When not referring to the economical terms, price has the same meaning of the compensating for something that has been acquired. When a criminal is arrested and incarcerated, we usually say that one has paid the price of the crime. This implies...
9 Pages(2250 words)Essay

Demand elastic

...Demand Elasti Table of Contents Introduction 3 Section 4 Section 2 5 Section 3 6 Bibliography 10 Introduction Price elasti of demand is oneof the most important tools of economics that measures the responsiveness of price of a product with the change in the quantity demanded of the product assuming that all other factors remain constant. Conceptualized by the noted economist, Alfred Marshall, the price elasticity of demand (or popularly known as price elasticity) always tend to be negative (except that of Veblen, Giffen or inferior groups). Price elasticity of demand has been a major tool for the companies and the producers of the goods to determine the price of a product as it provides with a comparative analysis of demand and supply...
4 Pages(1000 words)Assignment

The Price of Products and the Volume of Commodities

All industries have numerous substitute products available, and as such, factors such as price and quality contributes significantly to customers switching their products to their competitors. The ease of customers in finding a product offered by one company at a cheaper price, or higher quality goods increases the threat of substitute for the business (Porter, 2008). The threat of new entrants further weakens the power of an existing entity. Barriers of entry and exit in a market determine the threat of new entry for organizations ion an industry (p.129). Low capital requirements to start a business, few economies of scale in the industry, low switching costs of customers from one product to another and the ease of technology req...
23 Pages(5750 words)Essay

Harmonic Motion-Elastic spring

...Harmonic Motion-Elastic Spring Lab Report This experiment’s aim was to provide verification into the dependence period on the mass of the oscillator. To be able to achieve this goal, the researcher conducted 10 experiments with each experiment entailing the hanging of a different mass on the spring. The mass used in the experiments was changed in a subsequent manner through the addition of 10 grams weight to the initial 100 grams weight of mass. Consequently, the study was in 5 runs with each run lasting about 10 oscillations. The analysis of the data involved the drawing of scatter plots with the oscillating mass used as the independent variable while the time as the dependent variable. The plot resulted in a straight line that was used...
1 Pages(250 words)Lab Report

Elastic and inelastic price

...The price elasti of supply is obtained by dividing the percentage change in the amount of the product supplied by the percentage change in the products` price. This particular paper discusses the impact of a change in supply on two products whose price elasticity of demand is elastic for the first product and inelastic for the second. If the demand curve is elastic the resulting change in the amount of the product supplied will be larger than the price change. If the demand curve is inelastic, the change in the amount of product supplied will be smaller compared to the change in the price (Boyes and Melvin, 2012). Diagram A Diagram B (Boyes and Melvin, 2012) Diagram A represents a product with an elastic demand curve while diagram B...
1 Pages(250 words)Assignment

Elastic/Plastic Tensile Properties Materials

... Contents 3 Introduction 3 Objectives of the experiment 5 Materials and methods 5 Results 9 Definitions 9 Material A 10 Material B 11 Material C 13 Discussion 16 Conclusion 17 References 17 Abstract The experiment seeks to find out the tensile properties of mechanical materials. Some of the fundamental aspects of materials are expounded by determining its properties when subjected to various forces such as strain and stress. The properties of these materials are obtained by carrying out a testing process for elastic materials. In essence, laboratory experiments are normally conducted in a careful manner in order to determine the mechanical properties of different materials when they reach breakage limit. Behavior of various mechanical...
5 Pages(1250 words)Lab Report

Personal and Social Context of Agnes Price

...Discussion of Need in Relation to the Personal and Social Context of Agnes Price Submitted November 25, 2005 ID Abstract This paper will include an assessment of a 64 year old woman who lives with family and is suffering from depression. The assessment will be made based on Bowen’s System Theory with consideration for the fact that Agnes is in the latter part of her life span and has a number of stressful conditions to deal with. This case is being opened as a result of concerns raised during a family health visitor’s regular visits to the home where Agnes resides with her daughter and the young woman’s family. In addition to creating a case plan for Ms. Price this document includes a discussion of the rationale, theory and ethical...
7 Pages(1750 words)Case Study

Elastic and Inelastic Prices

These are so basic to life that irrespective of the price increase, people will buy them.
Those goods that are regarded as necessities tend to have lower price elasticity, whereas demand for luxury goods is more price elastic. As consumers’ incomes go up the classification of certain goods may change. A good that is considered a luxury at lower income levels may be considered a necessity at higher income levels.
Answer: Price ceilings are government restrictions on prices. Usually, these ceilings stipulate the legal maximum price a producer can charge for a particular good or service. Governments impose such controls normally to stop a rapid rise in the cost of a good or service during a shortage, in an attempt to bene...
6 Pages(1500 words)Coursework

Chilled Vehicles and Special Care of Products

Hiring another company or the third party to man the operations of the fleet of vehicles can put the company down. That would be like dealing with new employees who are not really working for the company, and who do not know our products. It will also be tantamount to revealing the secrets of our products and company that we have treasured all through the years. The best option is to work on the fleet of vehicles and get the right people to handle the operations. 
There are doubts as to the exact number of vehicles we have to purchase since these are all plans and some hypotheses. But we tried to scale down our output, made some estimates and inside surveys, and come out to some numbers, which were reached by calculating...
8 Pages(2000 words)Assignment

Factors Influencing the Consumption of Health Supplement Products among Those Concerned with Slimness

Modern Thai society has acquired food habits that are typical of the fast-paced modern lifestyles of many developed countries.

A considerable amount of attention is focused on what root causes underlie the type of peculiar behavior among an increasing number of Thais, both young and old, to purchase and use costlier health supplement products; why do they behave in this manner; how do they get hooked on these products; in which context, when and where do they find them to be necessary for addition to their daily intake of meals; and who are these consumers, i.e. consumer typology? In other words what theoretical constructs and empirical evidence would be required to build up the contingency model for the study of this b...
6 Pages(1500 words)Research Paper

Binomial Method in Option Price

...BINOMIAL METHOD in OPTION PRICING This research illustrates the use of the Binomial method for pricing European and American options . These options have been priced by generating the Binomial tree for the stock prices and then for the options . This research deals with the important concepts related to option pricing with methods like Black Scholes method and the Binomial method. The fundamentals of option theory , European options , American options, put call parity have been discussed in the course of the research . The relationship between these two methods has also been highlighted . The step by step procedure in option valuation using the Binomial method , explains the simplicity and accuracy of the method . The Binomial method...
48 Pages(12000 words)Assignment

Price Ceiling and Price Floor

Defined in the simplest of terms, price controls can be defined as the definition of a certain maximum or minimum level of the prices by the Government at which a good will be available in the market. The two most basic level of price control mechanisms undertaken by the Government are Price Ceiling and Price Floor. The Price Ceiling is the maximum price at which a good can be sold in the market whereas Price Floor is the minimum price at which the good will be sold in the market. While price Ceiling is generally meant to save consumer interest, the price floor is intended towards saving the interest of the supplier.
Price Ceilings can be categorized into two types: Binding Price ceilings are the one which is at a level lower t...
4 Pages(1000 words)Research Paper

(Business Report Not an Essay) Exporting products to China: Understanding the cultural environment for Chinese biscuit consumers

... is concerned with the understanding of the market trend of the Chinese market by recognizing the consumer trend in the market and finding the feasibility of the selected product in the target market. The lifestyle and social interaction plays a vital role in understanding the taste of the target market and deciding and customization of products is an essential strategy for the firm to suit the Chinese market. In the given context it was found that the Chinese market is not a big fan of cookie and high sugar content food and is also very price sensitive for products in the market due to many players in the market in biscuit industry (Smart, 2010, p. 122). But on the other hand Chinese Cookie segment is growing at a very fast pace than...
8 Pages(2000 words)Essay

Comparing Products: Xbox Versus Playstation

Determining which one of the two is better than the other is a rather difficult or an impossible task. This is because it all depends on the individual using it the console since each game console provides a broad range of varied features. Some people will love one console, while others could hate it. Generally, it has been agreed that the Play station and the Xbox are roughly comparable (Cheat, 2011). However, people will always hold different opinions as far as this matter is concerned.

The Xbox was set to the market in North America on 15th November 2001. It offered a stiff competition with Sony’s PlayStation. During the early years of its development, the marketing department in Microsoft argued against the n...
6 Pages(1500 words)Case Study

Animals Should Be Used to Test the Safety of Products

... Animals should be used to test the safety of products Each year, a considerably large number of animals undergo tests aimed at evaluating the toxicity of various products along with their ingredients on humans. These animals primarily include rabbits, guinea pigs, mice and rats where they are made to ingest or inhale substantial quantities of test substances or go through the pain of a chemical eating away at their sensitive eyes and skins. The problem with this testing is that more often than not the animal tests are undependable or not applicable to humans making the entire process pointless and plainly cruel on the animals. This is what has made animal experimentation controversial where animals have been used not only for product...
6 Pages(1500 words)Term Paper

Successful Products and Strategies of Apple Company

...Rough Draft Apple Company Summary Apple Company is one of the companies that succeeded in their marketing strategy,which catapulted them to greater heights. Apple introduced new technology that was user friendly and very interactive. They also set the price and the expectations level high due to the marketability of their products. Apple became front runner in customer appeal as people waited in line overnight to buy the new phone because of the differentiation that the company introduced in the mobile phone industry. Unlike any other mobile phone or Smartphone at that time, but like some of the other Apple products were already popular thus enhancing its sale high customer loyalty. Graphics-intensive user interface and intuitive menus...
7 Pages(1750 words)Case Study

Purchasing National Products

... level, the prices are much lower. In case when foreign producers prevail on the national market prices are higher (Stegemann 718). The point is that national products can be released with cheaper prices, because there is no need for national producers to add transportation and special taxes costs. Consequently, purchasing national products motivates new companies to appear, which intensifies market competition. It is obvious that the only way for company to survive in competitive market is to start reducing prices on their products. As far as we live in modern free market economy it is unavoidable for national markets to let foreign companies in. This, in fact plays into hands for national economy. Considering the situation when citizens...
8 Pages(2000 words)Assignment

US Military Safe Disposal of Waste Products

... Introduction The process of product development and utilization results in establishment of waste output. The ification of such output is subjected to various aspects of arguments. Development of products only focuses on the output that is useful in the meeting of the considered interests. Most of the non-useful materials are considered off the usage capacity of the involved products. Such observations render them out of usage in the respective process of production and consumption. There exist numerous aspects upon which they can be subjected into better forms of usage or disposal. However, the decision on adopting such measures of safety remains best vested with the ability of the involved institutions and the subsequent implication...
10 Pages(2500 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Price-Elastic Products for FREE!

Contact Us