Egt Task 1

The different forms of elasticity are directly related to the change in prices and quantity demanded for a product. The price elastic of demand is sensitive to differences in price changes that happen and quantity that is demanded. If the demand sensitivity is high the product will be high price elastic. If this happens the change in price would change the amount of demand for the product this would cause a change that would end up larger in proportion. When the product that is in demand has no sensitivity to the different price change for the product it is described as being price inelastic. When this happens the change of the price has the results of a change in a smaller demand, versus the proportion of product. The results will happens with the change of product demanded being smaller for the proportion requested. When looking at cross price elasticity its responsiveness when there is a change in the demand of a good with the result of a change in the price of a product that is related. If we look at two products that are related to each other you will notice when one price decreases the related product will have a increase in demand. When looking at a compact disk player if the price for this decreases. The demand for compact disk will increase. The cheaper the cost of the machine the more in demand the products for the machine will increase. If the products were simply a substitute of a product the lowering of the price would reduce the demand for the similar product. If you have Tylenol and Advil and the price reduces for Tylenol the demand would increase to Tylenol and decrease for Advil. When looking at income elasticity it is important to notice the response of change within the demand for the goods affected by the change in the income bracket of the consumers. When a consumer is going to purchase a product that is used in everyday purposes the income elasticity demand most all times is positive. When a consumer’s income has an increase the demand...