I.

LEARNING ACTIVITY

Activity No. 3
In your own opinion, how important is elasticity in the analysis of the market? Site example.
Elasticity is a significant financial measure, especially for the dealers of products or
administrations, since it shows the amount of a god or service consume when the price
changes. At the point when a product is flexible, an adjustment of cost rapidly brings about an
adjustment of the amount demanded. At the point when a good is inelastic, there is little
change in the amount of interest even with the difference in the great's cost. The change that is
noticed for an elastic good is an increase in amount after when the cost decreases and a
decrease in demand when the cost increases. Elasticity likewise imparts significant data to
customers. On the off chance that the market cost of an elastic good decreases, firms are
probably going to lessen the quantity of products or services they will supply. In the event that
the market cost goes up, firms are probably going to increase the quantity of products they will
sell. This is significant for buyers who need a product and are concerned with potential
scarcity.
Example:
Regularly, merchandise that are elastic are either superfluous products or service or
those for which contenders offer promptly accessible substitute labor and products. The airline
industry is elastic, the fact that it is a competitive industry. In the event that one airline chooses
to expand the cost of its passages, consumers can utilize another airline, and the airline that
expanded its fares will see a decrease in the demand for its services. Meanwhile, gas is an
example of a generally inelastic good the fact that numerous purchasers must choose the
option to purchase fuel for their vehicles, paying little heed to the market cost.

II. ASSIGNMENT #3. (Select one only)

1. What factors affect demand elasticity?

Availability of close substitutes
In the event that purchasers can substitute the useful for other promptly accessible
products that consumers view as comparable, at that point the price elasticity of interest would
be viewed as elastic. On the off chance that purchasers can't substitute a good, the great
would encounter inelastic interest.
If the good is a necessity or a luxury
The price elasticity of interest is lower if the great is something the buyer needs, like
Insulin. The price elasticity of interest will in general be higher if it is a luxury good.
The proportion of income spent on the good
The price elasticity of interest will in general be low when spending on a decent is a little
extent of their accessible pay. In this way, an adjustment of the cost of a good applies a next to
no effect on the purchaser's inclination to consume the good. While, when a good address an
enormous piece of the purchaser's pay, the buyer is said to have a more elastic interest.
Time elapsed since an adjustment of cost
In the long term, consumers are more elastic over longer periods, as long term after a
cost increases of a good, they will discover worthy and less costly substitutes.