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At the upper end of the demand curve the demand is more price elastic. Elastic ED > 1

When absolute value of Ed>1, the percentage change in quantity is more than the percentage change in price. This shows that consumers are very responsive to the price and that the demand is price elastic. When demand is more price elastic, a decrease in price will lead to a bigger proportion increase in quantity, and the firm’s total revenue will increase, vice versa.

At the mid point of the demand curve, the demand is unit elastic. Elastic Ed=1
This is because the percentage change in both price and quantity are the same. A decrease in price will result in the exact same increases in quantity, which will not affect a firm’s total revenue.

At the lower point of the demand curve, the demand is more price more inelastic. Inelastic Ed < 1. When absolute value of Ed<1, the percentage change in quantity is less than the percentage change in price. The consumers are not very responsive to price change and thus the demand is price inelastic. This means that the decrease in price will lead to a smaller proportion increase in quantity, and thus the firm’s total revenue will decrease, vice versa.

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a. Cigarettes

There are many brands and different types of cigarettes available, the determinants would be availability of substitutes. The greater number of substitutes, the more price elastic the demand of the good.

b. A particular brand of cigarettes
One maybe used to smoke a particular brand, this forms a habit, hence, the determinant is habit, that particular brand of cigarettes is consumed habitually, its demand is therefore price inelastic.

c. Butter

The determinant for butter is substitutes. Because we can use oil, margarine to replace butter. so the greater number of substitutes, the more price elastic the demand of butter.

d. Salt

The determinant for sale is necessity in cooking food in our daily lives, therefore the demand for salt is price inelastic

e. A two-week trip to Switzerland

A two-week trip to Switzerland is considered as a luxury, because as students we cannot possibly always go on a holiday. Hence, its considered as a luxury and its demand is price elastic.

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6.  Explain how price elasticity of demand of a good
differs along different segments of a straight-line demand curve and how this
affects a firm’s total revenue.

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6.  Explain how price elasticity of demand of a good
differs along different segments of a straight-line demand curve and how this
affects a firm’s total revenue.

# data[].attributes.body
When absolute value of Ed>1, the percentage change in quantity is more than the percentage change in price. This shows that consumers are very responsive to the price and that the demand is price elastic. When demand is more price elastic, a decrease in price will lead to a bigger proportion increase in quantity, and the firm’s total revenue will increase, vice versa.

When absolute value of Ed=1, the percentage change in quantity is equal to the percentage change in price. Hence the demand is unit price elastic and the decrease in price is proportional to the increase in quantity. Hence the firm’s total revenue is the same.

When absolute value of Ed<1, the percentage change in quantity is less than the percentage change in price. The consumers are not very responsive to price change and thus the demand is price inelastic. This means that the decrease in price will lead to a smaller proportion increase in quantity, and thus the firm’s total revenue will decrease, vice versa.

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2. Use the determinants of price elasticity of demand to
judge and explain whether the demand for the following products is price
elastic or inelastic:

  

# data[].attributes.subject
2. Use the determinants of price elasticity of demand to
judge and explain whether the demand for the following products is price
elastic or inelastic:

  

# data[].attributes.body
a.     Cigarettes

Habit. The demand is price inelastic as cigarettes are consumed habitually.

b.     A particular brand of cigarettes

Availability of substitutes. The greater the number of different alternative brands of cigarettes, the more price elastic the demand of a particular brand of cigarettes will be.

c.     Butter

Necessity. Butter is a common ingredient in everyday cooking, baking and consumption, therefore demand is price inelastic.

d.     Salt

Necessity. Salt is consumed on a daily basis as it is used to flavor our food. Hence the demand is price inelastic.

e.     A two-week trip to Switzerland

Luxury. A two-week trip to Switzerland costs a substantial amount of money, and not everyone has the funds or ability to travel. Hence it is price elastic.

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6. Explain how price elasticity of demand of a good differs along different segments of a straight-line demand curve and how this affect a firm's total revenue.

# data[].attributes.subject
6. Explain how price elasticity of demand of a good differs along different segments of a straight-line demand curve and how this affect a firm's total revenue.

# data[].attributes.body
At the upper end of the demand curve, the demand is more price elastic. This is because the percentage change in quantity is more than percentage changes in price, which result in Ed > 1. A decrease in price will result in a large proportionate increase in quantity, which will increase a firm’s total revenue.

At the lower end of the demand curve, the demand is more price inelastic. This is because the percentage change in price is more than the percentage change in quantity, which result in Ed < 1. A decrease in price will result in a smaller proportionate increase in quantity, which will decrease a firm’s total revenue.

At the midpoint, the demand is unit elastic. This is because the percentage change in both price and quantity are the same. A decrease in price will result in the exact same increases in quantity, which will not affect a firm’s total revenue.

- HongQuan

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2. Use the determinants of price
elasticity of demand to judge and explain whether the demand for the following
products is price elastic or inelastic:

# data[].attributes.subject
2. Use the determinants of price
elasticity of demand to judge and explain whether the demand for the following
products is price elastic or inelastic:

# data[].attributes.body
a. Cigarettes
Availability of Substitutes. Cigarettes is price elastics as there is many            different brands of cigarettes.

b. A particular brand of cigarettes
Habit. It is price inelastic as it is consumed habitually.

c. Butter
Availability of substitute. Price elastic. There is replacement for butter such as oil and margarine.

d. Salt
Necessity. Salt is considered a daily necessity, therefore the demand is price inelastic.

e. A two-week trip to Switzerland
Luxury. A two-week trip to Switzerland is considered luxury, therefore its demand will be more price elastic.

-HongQuan

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Q2. Use the determinants of price elasticity of demand to judge and explain whether the demand for the following products is price elastic or inelastic:

# data[].attributes.subject
Q2. Use the determinants of price elasticity of demand to judge and explain whether the demand for the following products is price elastic or inelastic:

# data[].attributes.body
a.      Cigarettes

Habit. As cigarettes are consumed habitually, their demand is price inelastic.

b.     A particular brand of cigarettes

Availability of substitutes. As there are many different brands of cigarettes, its demand is price elastic.

c.      Butter

Necessity. As butter is a necessity in cooking and more, its demand is price inelastic.

d.     Salt

Necessity. As salt is a daily necessity, its demand is price inelastic.

e.      A two-week trip to Switzerland

Luxury. As a trip to Switzerland is considered a luxury, its demand is price elastic.

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Q6. Explain how price elasticity of demand of a good differs along different segments of a straight-line demand curve and how this affects a firm’s total revenue.

# data[].attributes.subject
Q6. Explain how price elasticity of demand of a good differs along different segments of a straight-line demand curve and how this affects a firm’s total revenue.

# data[].attributes.body
Since the percentage change in quantity demanded is higher than the percentage change in price at the top half of the demand curve, the ED would be more than 1, making the demand price elastic. At the lower half of the curve, the percentage change in quantity demanded is lower than the percentage change in price, thus, the ED would be lesser than 1, making the demand price inelastic.

If the demand of the product is price elastic, an increase in the price of the product would result in a decrease in the firm’s total revenue and vice versa.

However, if the demand of the product is price inelastic, an increase in the price of the product would result in an increase of the firm’s total revenue and vice versa.

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 Li Yang Q6. Explain how price elasticity of demand of a good
differs along different segments of a straight-line demand curve and how this
affects a firm’s total revenue.

# data[].attributes.subject
 Li Yang Q6. Explain how price elasticity of demand of a good
differs along different segments of a straight-line demand curve and how this
affects a firm’s total revenue.

# data[].attributes.body
At the upper end of the demand curve the demand is more price elastic. Elastic ED > 1
The percentage change in Quantity is more than the percentage change in Price. When the demand is more elastic, a decrease in price will lead to bigger proportion to the increase in quantity. Hence, a firm's total revenue will increase.

At the mid point of the demand curve, the demand is unit elastic. Elastic Ed=1
The percentage change in price is equal to the percentage change in quantity. when the demand is price elastic, a decrease in price will bring about an exact proportion increase in quantity. So a firm's total revenue remains the same.

At the lower point of the demand curve, the demand is more price more inelastic. Inelastic Ed < 1. The percentage change in quantity is less than percentage change in price. When demand is more price inelastic, a decrease in price will bring about a smaller proportion increase in quantity, so a firm's total revenue will decrease.

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 Li Yang Q2. Use the determinants of price elasticity of demand to judge and explain whether the demand for the following products is price elastic or inelastic:

# data[].attributes.subject
 Li Yang Q2. Use the determinants of price elasticity of demand to judge and explain whether the demand for the following products is price elastic or inelastic:

# data[].attributes.body
The  5 determinants of price elasticity of demand are:

1.Availability of substitutes

2.Proportion of income spent on a good

3.Time period under consideration

4.Habit

5.Necessity vs Luxury

a. Cigarettes

Smoking is a form of habit, hence, the determinant is habit,  cigarettes is consumed habitually, its demand is therefore price inelastic.

b. A particular brand of cigarettes

There are many brands and different types of cigarettes available, the determinants would be availability of substitutes. The greater number of substitutes, the more price elastic the demand of the good.

c. Butter

The determinant for butter is substitutes. Because we can use oil, margarine to replace butter. so the greater number of substitutes, the more price elastic the demand of butter.

d. Salt

The determinant for sale is necessity in cooking food in our daily lives, therefore the demand for salt is price inelastic

e. A two-week trip to Switzerland

A two-week trip to Switzerland is considered as a luxury, because as students we cannot possibly always go on a holiday. Hence, its considered as a luxury and its demand is price elastic.

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Hello Group! Thanks for adding me Celeste! I will be looking forward to the group's participation on this wall! See ya!

# data[].attributes.subject
Hello Group! Thanks for adding me Celeste! I will be looking forward to the group's participation on this wall! See ya!