Analyze the determinants of the price elasticity of demand and determine if the following product is elastic or inelastic.
In your analysis, explain your reasoning and relate your answers to the characteristics of the determinants of the price elasticity of demand.
Price Elasticity of Demand:
An important determinant of the price elasticity of demand of a product is how necessary a product is. The higher the necessity of the product, the lower will be the price elasticity of demand for the product.
Answer and Explanation: 1
- Toothpaste will have a relatively price inelastic demand.
Toothpaste is not a complete necessity. So it will not have a perfectly inelastic demand....
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fromChapter 2 / Lesson 11
In microeconomics, the principle of price elasticity of demand is important to understand. Learn the definition of price elasticity of demand, understand the formula and its categories, and see some calculation examples.