Long story short my prof. can hardly explain elasticity when asked questions about it. If someone could please provide clarification to these problems and an easy way of understanding it that would be great.


-Indicate whether the demand for a good become more or less elastic.

The demand curve for soap after wide understanding that bacteria and other organisms cause and spread disease.

The demand curve for coal after the inanition of nuclear power plants.

The demand curve for cars as more employers allow employees to telecommute.

The demand curve for a new television during an economic boom.

The supply curve for diamonds if a new process for manufacturing diamonds is created.

Thanks in advance.

bro just think

nonexpendable items are inelastic (cigarettes)

expendable items are elastic like name brand soda vs storebrand

did you even read this: http://en.wikipedia.org/wiki/Price_elasticity_of_demand

1. wide understanding of disesases; firm raises price of soap; ppl still buy lots of soap. this means that after the wide understanding, demand became more inelastic

im not doing the rest of ur hwk for you

It makes a little more sense now...I just have a hard time processing this stuff in my head. Maybe drawing out the graphs would help? Anyways this is what I have come up with.

-Soap- The demand curve is inelastic for soap therefore, a wide understanding would make more people consider it a normal good causing it to become more inelastic.

-Coal- The demand curve for coal is going to be elastic because there are substitutes however, when the inanition of power plants occurs coal will have less substitutes make it become less elastic.

-Cars- The demand curve for cars is going to be elastic right? When employers allow employees to telecommute the demand curve is going to become less elastic?

-Televisions- The demand curve for televisions is going to be elastic. When there is an economic boom people will have more money making the overall population less responsive to price becoming less elastic?

-Diamonds- The demand curve for diamonds is elastic? Therefore, when diamonds are mass produced they are going to become less elastic?

The problem I feel like I am running into on each of these problems is determining whether the good is elastic or inelastic...maybe its the questions I am asking myself to determine it? For example, I ask myself if there are many substitutes for the good, and if the price goes up or down will the demand greatly change. However, for items like diamonds and televisions it seems contradictory; diamonds have no substitutes but the demand greatly changes when price changes...the same is with televisions.

Any advice to make this an easier process would be appreciated.

There are a few things that determine (relative) elasticities. As an example, one determinant is whether a good is a luxury or necessity. Why? Well, in a nutshell the price elasticity of demand tells us how much the quantity changes (in percent terms) when the price changes (also in percent terms). Ask yourself then what happens when the price of a necessity increases--how many people will change their buying habits? What about a luxury? For the homework questions, you should ask yourself if people are more responsive or less responsive to a change in price after the event as compared with before.

There are a few other things that determine how people's behavior changes--are other alternatives available for one.

By the way, all of the questions you mentioned dealt with the demand or supply curve, so that has to do with the price elasticity of demand. Normal or inferior has to do with income elasticity of demand, and I believe is irrelevant in your assignment.

some of those questions arent very good. a simple increase or decrease in the quantity demanded/supplied doesnt change the shape of the curve, its just a different point on the same curve. some of those may shift the curve but not change the elasticity.

Just think of what happens when the price goes up - are most people still willing to pay the higher price - if yes, it's somewhat inelastic - the more the price can rise without demand dropping too much, the more inelastic the item is.

I don't think there are absolute terms to classify something as inelastic or elastic - that's why the questions are "more" or "less" relative to what it was before the change in each problem. but it common lingo, you would say gas prices are fairly inelastic since most people aren't going to change their driving habits much whether gas is 2.50 or 4.50

with the car one, you are going to be less likely to pay for a car if the price goes up since if you can now telecommute, so its more elastic.

with Price elasticity of demand or supply, there are absolute terms. Elasticity of 1 is unit elastic. Less than 1 is inelastic and greater than 1 is elastic. But you can also say one curve is less elastic than another if the elasticity of the first is less than the elasticity of the second.

BTW, I'm taking the absolute value of the price elasticity of demand in the above paragraph.

Aren't a lot of those examples of long term Elasticity vs short term. For example the coal is still inelasticity since it will take a long time to build replacement nuclear power plants.

Thanks guys, I appreciate the clarification.

yeah afaik china has operational nuclear power plants and their demand for coal is still going up.

Your book should explain everything reasonably well and have examples comparable to these questions.