MIEC TA25 G4 + JONATHAN, QUNSHAN, MAXELL, KELLY & NATASHIA by Epic Jon

MAXELL Q2A

epicjonnycake — 2016-05-12 06:25:02 UTC

Cigarettes is under "Habit" among the determinants of price elasticity. Cigarettes are consumed habitually. This does not affect the demand of smokers. The change in price of cigarettes will not affect responsiveness. Thus, it is inelastic.

MAXELL Q2B

epicjonnycake — 2016-05-12 06:33:37 UTC

A particular brand of cigarettes, i believe, is under "Availability of substitutes" among determinants of price elasticity. Consumers can seek for other cigarette brands for smoking. The price affects the brand industry and therefore, it is elastic as a high response will be seen.

MAXELL Q2C

epicjonnycake — 2016-05-12 06:48:45 UTC

Butter is a necessity, so it will be under "Necessities v Luxury". Butter is needed and in demand despite the change of price. Thus, the change of price will affect the demand response in the market. We still have to buy it even at high price. Therefore, it is inelastic.

MAXELL Q2D

epicjonnycake — 2016-05-12 06:58:30 UTC

Salt is also under a necessity, so it will be under "Necessities v Luxury". Salt has no alternatives which means it has a high demand regardless of its pricing. Thus, the change of price will not affect the quantity demanded. Therefore, it is inelastic.

MAXELL Q2E

epicjonnycake — 2016-05-12 07:05:34 UTC

An overseas trip, is under "Proportion of income spent on a good". Going on an overseas trip covers a significant proportion of one's income. Aside from the aviation fees, people have to pay a significant amount of accommodation. With one stacked above the other, it will be a huge sum of money. People tend to be more responsive to the price range. Therefore, it is elastic.

JONATHAN POH Q2A

epicjonnycake — 2016-05-14 08:58:24 UTC

Smoking cigarettes is a habit which is consumed continuously regardless of its price. This means that the consumers will not be very responsive to the chance in price. Hence the demand for cigarettes are price inelastic

JONATHAN POH Q2B

epicjonnycake — 2016-05-14 09:06:24 UTC

Determinant applied :
Availability of Substitutes
A particular brand of cigarettes has other cigarette brands as substitutes. This means when there is a price change for a particular brand of cigarette, substitutes are available for purchase. Leading to consumers being more responsive to the change in price. Hence the demand for a particular brand of cigarettes is relatively price elastic.

JONATHAN POH Q2C

epicjonnycake — 2016-05-14 09:17:44 UTC

Determinant applied : Necessity VS Luxury
Butter is a necessity in our everyday life which is consumed regardless of its price. This means people will not be very responsive to the change in price, hence the demand of butter is price inelastic

JONATHAN POH Q2D

epicjonnycake — 2016-05-14 09:20:27 UTC

Determinant applied : Necessity VS Luxury
Salt is a product used in our day to day meals to make them taste better. This means that it is a necessity and will be consumed regardless of its price. Hence consumers will not be very responsive to the change in price of salt. Therefore the demand of salt is price inelastic.

JONATHAN POH Q2E

epicjonnycake — 2016-05-14 09:25:03 UTC

Determinant applied : Proportion of Income spent on a good
A 2 week trip to Switzerland generally very costly. This means a large proportion of income is spent on the trip. This means that people will be very responsive to the change in prices regarding the trip. Thus, the demand for a 2 week trip to Switzerland is relatively price elastic.

JONATHAN POH Q5

epicjonnycake — 2016-05-14 09:31:48 UTC

Please click in unedit mode :)

TA25 KELLY HAN Q2A

han_kelly — 2016-05-14 12:16:46 UTC

The factor that affects the Price Elasticity of Demand for smoking cigarettes is "habit" For majority of the smokers, smoking has been what they have being doing frequently and would not be able to stop(change this habit) easily even when there is a rise in price. Hence, even with price change, smokers will be unresponsive and the demand of smoking cigarettes will still be about the same hence it is price inelastic.

TA25 KELLY HAN Q2B

han_kelly — 2016-05-14 12:25:36 UTC

The factor that affects the Price Elasticity of Demand for smoking a particular brand of cigarettes is "Availability of substitutes" Increasing the price of a particular brand of cigarette will cause the demand for that particular brand to decrease as there are many other brands(substitutes) of cigarettes in which consumers can go to. Hence, for this case consumers will be very responsive and it is price elastic.

TA25 Kelly Han Q2C

han_kelly — 2016-05-14 12:31:43 UTC

The factor that affects the Price Elasticity of Demand for Butter is "Necessity VS Luxury" Butter is needed in our daily lives such as baking and there is no substitutes in this case. Hence even with the change in price, demand for butter will not change and consumers will not respond much to the change in price. Therefore, in this case it is price inelastic.

TA25 Kelly Han Q2D

han_kelly — 2016-05-14 12:37:54 UTC

The factor that affects the Price Elasticity of Demand for salt is "Necessity VS Luxury". Salt in needed in our daily lives such as cooking soup or vegetables and there are no other substitutes for salt. Hence even with price changes to salt, consumers will not be responsive and continue buying salt. Therefore, in this case, it is price inelastic.

TA25 Kelly Han Q2E

han_kelly — 2016-05-14 12:41:08 UTC

The factor that affects the Price Elasticity of Demand for A Two-week trip to Switzerland is "Proportion of Income spent on a good". A two week trip to Switzerland uses up a large proportion of one's income. Hence, the change in price will cause one to be very responsive. Hence, in this case it will be price elastic,

TA25 Kelly Han Q5

han_kelly — 2016-05-14 13:26:37 UTC

This is my answer for Q5.

TA25 ZHOU QUNSHAN Q

zhouqunshan3 — 2016-05-15 02:15:58 UTC

The determinants of cigarettes is 'habit' due to smokers consume cigarettes on a daily basis and some of them are even addicted to it. This results in the price elasticity of demand for cigarettes to be inelastic as they have to get cigarettes no matter what is the cost.

TA25 ZHOU QUNSHAN Q2B

zhouqunshan3 — 2016-05-15 02:20:30 UTC

The determinants of a particular brand of cigarettes is 'availability of substitutes'. Since there are a lot of cigarettes brands in the market,when there is an increase in price for a particular cigarettes brand, consumers would most likely buy other relatively cheaper brands of cigarettes. This results in the price elasticity of demand for a particular brand of cigarettes to be elastic.

TA25 ZHOU QUNSHAN Q2C

zhouqunshan3 — 2016-05-15 02:26:30 UTC

The determinants of butter is 'necessities VS luxury'. Since butter is consumed almost daily, it is considered a necessities in our lives, resulting it to be inelastic as consumers would have to buy butter no matter what is the cost

TA25 ZHOU QUNSHAN Q2D

zhouqunshan3 — 2016-05-15 02:28:37 UTC

The determinants of salt is 'necessities VS luxury'. Since salt is consumed almost daily, it is considered a necessities in our lives, resulting it to be inelastic as consumers would have to buy salt no matter what is the cost.

TA25 ZHOU QUNSHAN Q2E

zhouqunshan3 — 2016-05-15 02:30:31 UTC

The determinants of a two week trip to Switzerland 'is proportion of income spent on a good'. Since travelling to other countries far away from Singapore normally requires a lot of money, resulting it to be elastic as a larger portion of our income spend on a good, the more elastic it will be.

MAXELL Q5

maxellchngjy — 2016-05-16 13:00:53 UTC

ANSWERS FOR Q5

TA25 Natashia Pek Q2A

natashiapekk — 2016-05-16 18:27:57 UTC

Determinant : Habit

Since cigarettes is consumed habitually, smokers will addicted to it and will continue to purchase cigarettes regardless of the change in price, therefore cigarettes is price inelastic since consumers are not responsive to it.

TA25 Natashia Pek Q2B

natashiapekk — 2016-05-16 18:28:51 UTC

Determinant : Availability of substitutes

The greater number of substitutes in the market will affect the price elasticity of the product. Since there are more options available in the market, a particular brand of cigarettes will be price elastic as consumers can always purchase other brand of cigarettes if there is a change in price. Therefore, it is price elastic.

TA25 Natashia Pek Q2C

natashiapekk — 2016-05-16 18:30:03 UTC

Determinant : Necessity vs luxury

Butter is considered as a necessity hence it is price inelastic since consumers will still have to consume and purchase butter even if there is a change in price. Therefore, it is price inelastic.

TA25 Natashia Pek Q2D

natashiapekk — 2016-05-16 18:30:33 UTC

Determinant : Necessity vs luxury

Salt is also considered essential in consumer goods, hence it is also considered as necessary. Since it is necessary and much needed in consumer goods, consumers will purchase them at any cost, even if there is an increase in the sale of salt. Therefore, it is price inelastic.

TA25 Natashia Pek Q2E

natashiapekk — 2016-05-16 18:31:00 UTC

Determinant : proportion of income spent on a good

A two week trip to Switzerland would usually cost a large sum of income on it, consumers will then be more responsive. Therefore, it is price elastic.

TA25 ZHOU QUNSHAN

zhouqunshan3 — 2016-05-17 05:24:39 UTC

TA25 Natashia Pek Q5

natashiapekk — 2016-05-18 02:05:20 UTC

TA25G4 FINAL SOLUTION Q5

epicjonnycake — 2016-05-18 02:15:20 UTC

TA25G4 FINAL SOLUTION Q2A

epicjonnycake — 2016-05-18 02:15:32 UTC

Determinant : Habit
Smoking cigarettes is a habit that some people are even addicted to. This means cigarettes will be consumed continuously even when there is a price change. This means that the smokers will not be very responsive to the change in price and the price elasticity of demand for cigar
ettes is inelastic.

TA25G4 FINAL SOLUTION Q2B

epicjonnycake — 2016-05-18 02:42:42 UTC

Determinant : Availability of substitutes
A particular brand of cigarette has other cigarette brands as substitutes. This means when the price of a particular brand of cigarette increases, consumers can seek other cigarette brands as an alternative to smoke. Hence consumers will be very responsive to the change in price and the demand is relatively price elastic.

TA25G4 FINAL SOLUTION Q2C

epicjonnycake — 2016-05-18 02:57:37 UTC

Determinant : Necessity vs Luxury
Butter is a necessity as it is consumed daily. Regardless of the change in price, butter will be in demand hence people will not be very responsive to the change in prices of butter. Hence the demand for butter is price inelastic.

TA25G4 FINAL SOLUTION Q2E

epicjonnycake — 2016-05-18 03:01:21 UTC

Determinant : Proportion of Income spent on a good
Going on a 2 week trip to Switzerland generally very costly and will covers a significant proportion of one's income. This means that people will be very responsive to the change in prices regarding the trip. Therefore the 2 week trip is price elastic.

epicjonnycake — 2016-05-18 03:24:36 UTC

TA25G4 FINAL SOLUTION Q2D

epicjonnycake — 2016-05-18 03:25:00 UTC

Determinant : Necessity vs luxury
Salt is considered an essential in consumer goods, which is used in our daily meals. This means that salt is a necessity that has no alternatives. Hence, even with price changes to salt, consumers will not be very responsive. Therefore the demand of salt is price inelastic.

Tutor's comments:

vha2 — 2016-05-18 07:14:40 UTC

Excellent job with Q2 and the determinants of elasticity.

The calculations in Q5 are all correct but the conclusion isn't, although in the individual comments Jonathan and Qunshan got it right and Natashia got half of it right. Please have a look at their answers:
Positive EY = normal good
Negative EY = inferior good
ED > 1 elastic
ED < 1 inelastic.

Cheers!