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The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams.
- Essay length: 2019 words
- Submitted: 19/06/2006
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Marked by teacher:
Nick Simmons
Teacher essay summary
The essay could do with more statistics, for example including example figures from diagrams in the formulae for elasticity of demand, to support the concepts of inelastic and elastic demand. The conclusion is also very short. Furthermore, the author didn't fully explain why the concepts help producers. It should be explained further that a producer can increase the price if demand is inelastic, but then this has implications in terms of customer loyalty. Moreover, how does elasticity help consumers? It's more of a concept to say how price changes alter consumers' demand, rather than a tool they can actually use.
Marked by teacher Nick Simmons 25/03/2012
The first 200 words of this essay...
The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams. In every market economy, when the price of a good rises the quantity demanded will fall and vise versa. Conversely, in most cases this is not enough. We would also like to know how much will the quantity demanded rise or fall. In other words, we will want to know how responsive demand is to a rise in price. This responsiveness of quantity demanded to a change in price is what we call price elasticity of demand. Therefore, what we want to compare is the size of the change in quantity demanded with the size in the change in price. Because of the different units that price and quantity are measured in, the only approach we can do this is to use percentage or proportionate changes. From this derives the "formula of the price elasticity of demand (PED)" for a product, which is the percentage (or proportionate) change in quantity demanded divided by the percentage (or proportionate) change in price. Putting this formula in symbols we have:
PED= %?QD
%?P
Where E
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MbT essay summary
The essay could do with more statistics, for example including example figures from diagrams in the formulae for elasticity of demand, to support the concepts of inelastic and elastic demand. The conclusion is also very short. Furthermore, the author didn't fully explain why the concepts help producers. It should be explained further that a producer can increase the price if demand is inelastic, but then this has implications in terms of customer loyalty. Moreover, how does elasticity help consumers? It's more of a concept to say how price changes alter consumers' demand, rather than a tool they can actually use.
