Determinants of Elasticity

Write a short (2-3 page, double-spaced, typed) essay identifying and describing two markets of your choosing; the first characterized by an elastic demand and the second one by an inelastic demand. Indicate why your choices have the relative elasticities they do.

Hint: Use the determinants of elasticity to sort why some products are elastic and others are inelastic.

Market One: What are some of the goods you purchase in your life for which your demand is most elastic? Why?
Market Two: What are some of the goods you purchase in your life for which your demand is highly inelastic? Why?

Hint: Use the determinants of elasticity to sort why your choices in Market One are elastic and why the choices in Market Two are inelastic.

Solution Preview

Elasticity is a termed used to explain how the change in price of a good or product can affect the demand and supply of the same product. The elasticity of demand is how the price of a product can cause the increase or decrease of the demand of the product while elasticity………………………………….

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