Assignment Detailsprice Elasticity Of Demand Measures Consumers Resp ✓ Solved

Assignment Details: Price elasticity of demand measures consumers’ responsiveness to changes in the price of a good. There are a number of variables that affect consumers’ decisions, among them the following: The availability of substitutes The specific nature of the good The part of income spent on the good The time consumers have to buy the good Please draw on your experiences as a consumer and your Unit 2 readings to address the following 4 topics. Make sure you use economic concepts in your main contribution. Choose a product that you have purchased in the past 1–3 months from a clothing or shoe store. Describe how each of the 4 factors listed above contributed to the elasticity of the good.

Is the product considered elastic, inelastic, or unitary elastic? What effect does the current supply and current demand have on this product? Deliverable Length: 200 words (minimum) Reading Assignment Read the following chapters from the Microeconomics textbook: · Chapter 2 · Demand, pp. 19-20 · Supply, pp. 16-17 · Equilibrium, p.

21 · Chapter 3 · Elasticity of Demand, pp. 27-31 · Elasticity of Supply, pp. 31-32 · Perfectly elastic, Perfectly inelastic, pp.30-31 Reflective Writing Activity Focused Questions Please use the rubric to assess your reflection prior to submission. Introduction: · Should set the stage for your observations and include a brief introduction to the film. · What was/were the ethical dilemma(s) at the core of the film? Reflection and Contextual Examples: · What did you learn from the film? · What pre-existing beliefs were supported and/or challenged by the film? · Include brief, contextual examples to support your reflection Application to Future/Current Work: · What themes from the film made you think about your future/current science work? · Do these themes challenge or support your pre-existing thoughts about future/current science work? Conclusion: · Should be a summary of your reflections and application to future/current work

Paper for above instructions

Understanding Price Elasticity of Demand: A Consumer Perspective

Price elasticity of demand (PED) is a crucial concept in microeconomics that gauges the degree of responsiveness or sensitivity of consumers' demand for a product in relation to changes in its price. Understanding this measure can help businesses and policymakers make informed decisions regarding pricing, supply, and demand strategies. In this paper, I will analyze my recent purchase of a pair of running shoes from a well-known athletic store and evaluate how four distinct factors contribute to the elasticity of this product: the availability of substitutes, the specific nature of the good, the part of income spent on the good, and the time consumers have to buy the good.

1. Availability of Substitutes

The availability of substitutes significantly influences the price elasticity of demand. When consumers identify numerous alternatives for a product, they tend to be more responsive to price changes. In my case, there are numerous brands and types of running shoes, including Nike, Adidas, Asics, and New Balance, all of which compete for market share. If the price of my chosen brand were to increase significantly, I could easily switch to one of the alternatives without substantial loss of utility or value. According to the principles outlined in microeconomics, the more substitutes present, the more elastic the demand (Mankiw, 2020).

2. Specific Nature of the Good

The nature of the good also plays a crucial role in determining its price elasticity. Running shoes are a consumer good, but their characteristics can make them either elastic or inelastic. For instance, specific features, such as advanced cushioning technology or endorsements by professional athletes, can make a brand more in-demand, making its price somewhat inelastic. However, in general terms, athletic shoes are considered elastic because they are not a necessity; thus, consumers can delay purchases or opt for cheaper alternatives. Mankiw (2020) also emphasizes that luxury goods often face more elastic demand since consumers can postpone their purchases.

3. Part of Income Spent on the Good

The proportion of income that consumers allocate to a good significantly impacts its elasticity. Running shoes can range widely in price, but a good pair typically costs between and 0. For most consumers, this amount represents a moderately significant expenditure, suggesting that demand will be moderately elastic. If prices were to increase substantially, consumers may reconsider their necessity. According to the economic principle of Engel's Law, as income rises, the proportion spent on luxury items tends to decrease, which indicates a higher elasticity for goods like running shoes (Mankiw, 2020).

4. Time to Buy the Good

The timeframe consumers have to make a purchase can also impact elasticity. In the case of running shoes, if a consumer needs them for an upcoming marathon within a month, they may be less sensitive to price increases due to urgency, suggesting temporary inelasticity. However, if one considers purchasing shoes over a more extended period, the demand is more elastic as consumers can shop around for better prices. As indicated by Mankiw (2020), demand tends to become more elastic as the time frame for purchase lengthens, allowing consumers greater opportunity to find alternatives.

Conclusion: Elasticity Assessment

Based on the aforementioned factors, the running shoes I purchased can be characterized as elastic. The availability of substitutes ensures that consumers can easily switch brands depending on price changes, while the specific nature of running shoes indicates that they are considered luxury items rather than necessities. The moderate share of income spent on this purchase also contributes to elastic demand. Current market conditions, where demand for athletic apparel remains high due to trends in fitness and wellness, further influences the elasticity, alongside supply factors that can shift demand based on marketing strategies and seasonal promotions.
In summary, understanding price elasticity provides valuable insights into consumer behavior, informing both businesses and policymakers. My recent experience buying running shoes illustrates how various factors interplay to define the elasticity of demand, affecting pricing strategies and consumer choices in the athletic shoe market.

References

1. Mankiw, N. G. (2020). Principles of Economics (8th ed.). Cengage Learning.
2. Marshall, A. (1920). Principles of Economics (8th ed.). Macmillan.
3. Stiglitz, J. E., & Walsh, C. E. (2007). Principles of Microeconomics (4th ed.). Norton.
4. Varian, H. R. (2010). Intermediate Microeconomics: A Modern Approach (8th ed.). W. W. Norton & Company.
5. Lipsey, R. G., & Chrystal, K. A. (2015). Economics (13th ed.). Oxford University Press.
6. Pindyck, R. S., & Rubinfeld, D. L. (2012). Microeconomics (8th ed.). Pearson.
7. Perloff, J. M. (2016). Microeconomics (7th ed.). Pearson.
8. Kreps, D. M. (1990). A Course in Microeconomic Theory. Princeton University Press.
9. Goolsbee, A., Levitt, S. D., & Syverson, C. (2013). Microeconomics. Worth.
10. Tietenberg, T., & Lewis, L. (2016). Environmental and Natural Resource Economics (10th ed.). Pearson.