A successful advertising campaign will lead to a positive shift in demand for a good. Common examples of products with high elasticity are luxury items and consumer discretionary items, such as brand-name cereal or candy bars. Food products are easily substituted and brand names are easily replaced by lower-priced items. An elastic good is defined as one where a change in price leads to a significant shift in demand and where substitutes are available for an item, the more elastic the good will be. The price elasticity of demand for milk is 0.2, which is less than one. Therefore, in such a case, the demand for milk is relatively inelastic. Thus, it can be observed that even when there is a change in the price from OP1 to OP2, quantity demanded remains the same at OQ1. Gasoline and oil, however, have no close substitutes and are necessary to power equipment and transportation. This means that should the manufacturer reduce the price of the good, the product is likely to have more demand. Alternatively, should the manufacturer increase the price of the good, the product is to have less demand. There are a wide range of specific products that have higher price elasticity of demand. This list below is not meant to be exhaustive; instead, it provides specific examples that may or may not fit into the categories above that tend to be more elastic. There are a variety of factors that determine a good’s price elasticity of demand. These include https://1investing.in/ such things as the essential or non-essential nature of certain goods, the availability of competitive substitutes, and the effect of a good’s brand name and marketing. The elasticity of demand refers to the degree to which demand responds to a change in an economic factor. Price is the most common economic factor used when determining elasticity. Last year, I received a proposition on “X” widely known as ’Twitter” regarding cryptocurrency and stock investments. You had planned to buy four pairs of jeans this year, but now you might decide to make do with two new pairs. A slight fall in […]