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I need all answers to be 100% Plagarism FREE, 200 word count. 1.) Week 1 Price and Income Elasticity of Demand As Colander discusses in the textbook, luxury goods will have an elastic price elasticity of demand and necessities will have fewer substitutes which can make them less elastic. A necessity will always have a price elasticity of demand which is less than 1; a good or service with a price elasticity of demand of zero is perfectly inelastic (i.e., life saving medical treatment). The number of available substitutes is the most important determinant of a good's or service's price elasticity of demand. According to Colander, how are price elasticity of demand and income elasticity of demand related? Which is the most important determinant of the demand for a good or service and why? If a product has an increase in the number of substitutes available for the product, especially close substitutes, there should be an increase in its price elasticity of demand. I have discussed generics vs. name brands with a number of microeconomics classes and students have pointed out that generics are often produced by the same companies which make name brands for grocery store chains, which would of course tend to make these product close substitutes. This article from Time magazine online discusses this fact. 2.) Week 1 Generic vs. Brand Name Goods (Substitutes) http://business.time.com/2012/11/01/brand-names-just-dont-mean-as-much-anymore/ "Consumers have also gotten clued in to the fact that many “generic” store-brand foods are actually made by the same companies that produce the higher-priced name-brand stuff. The foods have been known to come out of the same factories, with the same ingredients inside and everything, with the only difference being the label. The result is that often, switching to a store brand is an easy way to save 30% or so, without sacrificing quality." The article also mentions the trend of consumers permanently switching to generic items due to the cost savings and the realization that the products are identical. Based on your experience, has the demand for brand names decreased since the long recession ended as generic products are now perceived as being closer substitutes? 3.) Week 2 Short Run and Long Run Price Elasticities Consumer spending for a good or service will respond to price changes and supply of the good, either by consuming more or less of the good or service. How these changes occur over time is measure by the short run and long run calculated price elasticities of demand for the good or service in question. Colander presents a number of short run and long run price elasticities in a table, discussed in Chapter 7. Is there an example of a good or service in which the good's elasticity changes from inelastic to elastic over the long-run? Are there any goods which remain inelastic over the long run period? How does Colander define the short run and long run periods when calculating elasticities?
    • Posted: 6 years ago
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