Inelastic Products

The majority of the products that Tesco sells are elastic goods, such as electrical goods. Elastic goods demand changes depending on the price. However Tesco does sell inelastic products, which are necessities such as milk as customers still need to buy these. Inelastic means that the demand for the product does not change, even if there is a change in price.

The price elasticity of demand for the goods and services supplied by the Electricity, Gas and Water division is low, as the feature of this division reflects the fact that electricity, gas and water are regarded as essentials in both business and households.

Elasticity of demand is the relationship between the demands for a product with respect to its price. Generally, when the demand for a product is high, the price of the product decreases. When demand decreases, prices tend to climb. Products that exhibit the characteristics of elasticity of demand are usually cars, appliances and other luxury items. Items such as clothing, medicine and food are considered to be necessities. Essential items usually possess inelasticity of demand. When this occurs prices do not change significantly.

Inelastic means inflexible, and it means there are no substitutes for that product. An inelastic product would be gasoline, because there is only one kind of gasoline.

Elastic demand or “elasticity means the extent to which the quantity demanded changes when there’s a change in the price of a good” (Thinkwell, 2013). A product is considered elastic when the change in price increases the percentage change in quantity demanded. When

Price elasticity that relates to demand is determined by many factors. Price elasticity is measured by the change in price and the response from consumer demand. The demand of a good or service will vary the price in the item. The most important factor to determine the price elasticity of demand is necessity. If a good is a necessity, the demand will seldom change and the price is able to be adjusted. The demand is the most important due to the freedom it provides for price adjustment and inventory control. With necessity comes an inelastic price. Other factors such as the

____ 14. If an increase in the price of green ketchup increases the demand for red ketchup, then

Have you thought about other things that are inelastic? Some other products that I find to be inelastic are like for one is gas. I feel that gas is inelastic good because we depend on the gas to run our cars that get us from point A and point B. It shows that if something happens to a oil line which happened recently that even though gas prices are going up that the number of customers buying the product are about the same because everyone who drives a car needs gas to be able to use it. Another inelastic good is bottled water that we all depend on since we need it to survive. Water i feel is the most inelastic good because we need water and people aren't going to stop buying water unless it has bad bacteria in it and people will get

5) Elasticity – elastic; as price changes, acceptable price is a key criterion when consumers decide on a product.

Elasticity : rising or falling price lead changes in quantity of demand, and the quantity of supply and this so-called elasticity

There are three kinds of elasticity. There is elastic demand, where the elasticity is over 1. There is unitary elastic, where it is at 1.0. There is inelastic demand, where the elasticity is under 1 (Investopedia, 2013).

When a good is a necessity it is something that is needed; unlike a simple desire to have something. These items have more of an inelastic demand even if the prices fluctuate. Wheat is a rich commodity in our country. The demand for wheat is inelastic. No matter how high the price rise the demand will still remain high in view of the fact that the price is determined by supply and demand. There are many producers of wheat which does not raise the profit level much for the farmers since their competition are all selling identical products. Other items, such as; basics in personal care, food, commodities, and medicine. The basic items that are needed to survive. Demands for these items may change over time but will not change very much. Their value can fluctuate if there are comparable substitutes available. Personal care items such as clothes and shoes are not in a single category where choices are concerned. There are a wide variety of manufactures and stores that sell them. So if the price raises the demand would be elastic because of substitutes. Food as a basic need is inelastic. However, if the prices were to rise on beef consumers could choose to substitute eating chicken, turkey, or pork instead. So even though the prices rose the demand would not increase because of acceptable substitutes. Medical service as a necessity is inelastic in demand. This is a service that is unquestionably needed for survival.

When price elasticity of demand is elastic, the coefficient will be greater than one. When a percent price change occurs quantity demanded responds strongly there will be a large change in quantities consumers purchase. There is price sensitive in this scenario. If price elasticity of demanded is inelastic the coefficient will be less than one. When a percent price change occurs quantity demanded does not respond strongly then there is a slight change in quantities consumers will purchase. There a weak price sensitive in this scenario. Lastly, if price elasticity of demanded is unit elastic the coefficient will be equal to one. Whenever there is a percent change in price there is an equally matched percent change in quantity demanded. This scenario is rare.

The price elasticity of demand which is the absolute value of -0.44, is inelastic. The price elasticity of a demand is the ratio of the percent change in quantity demanded to the percent change in price (McGuigan, et. al, 2014). An inelastic demand results when the percentage

Elasticity of demand is shown when the demands for a service or goods vary according to the price. Cross-price elasticity is shown by a change in the demand for an item relative to the change in the price of another. For substitutes, when there is a price increase of an item, there is an increase in the demand for another item. When viewing complements, if there is an increase in the price of an item, the demand for another item decreases. Income elasticity is shown when there is a change in the demand for a good relative to a change in income. This concept is shown in how people will change their spending habits when their income levels change. For