Running head: UNIT 3 ASSIGNMENT – ELASTICITY AND PRODUCTS 1
Unit 3 Assignment – Elasticity and Products
Unit 3 Assignment – Elasticity and Products
Part 1: Elasticity and Products
Choose any five products that exist within and economic market and classify and describe
their elasticity’ (inelastic, elasticity, perfect elastic, perfect inelastic, unitary elastic).
Dog food: In a market economic, dog food would be an inelastic good because the quantity
demanded will barely change no matter how high or low the price is. People love dogs and dogs
need dog food to survive, so the dog’s owner will by dog food, so their dog stays healthy. If
income increased, then the consumption increases in a smaller amount than an increase in
income. If there is a loss of a job, the opposite will happen. The consumption, or demand
quantity will decrease but in a small amount compared to the income decrease because this
product is a necessity. (Experimental Economics Center, 2006) If a substitute was introduced,
there would be less of a chance of trying it if your dog is happy with the current brand food that
you buy. If there was a sudden shortage of dog food, then people would pay a higher price for
the dog food because it is a necessity.
Luxury car: A luxury car is an elastic good because this kind of product is readily available, and
a person does not need this in their daily life. (Hayes, n.d.) If income increased, then the
quantity demanded for this product would go up. If there was a loss in job, then the demand for
this product would go down because if someone didn’t have a job, they would buy cheaper
modes of transportation. If a substitute was introduced, the public would probably look at the
substitute if it had the same power and prestige as the original. For example, some people will
buy a corvette just because it is a corvette, so they will not be swayed easily to other models. If
there was a shortage of the product then some people would pay more money because the
Running head: UNIT 3 ASSIGNMENT – ELASTICITY AND PRODUCTS 2
product has become more rare and valuable, but most people will not be willing to spend the
higher price.
Oranges: Oranges is a perfect elastic product because the demand for it is completely reliant on
the products price making it infinity at a specific price. (My Accounting Course, 2018) If income
increased then the demand will decline because this is an inferior good and people will spend
their money on higher end fruit and food. If there was a loss of job, then the demand for oranges
would go up because they are fairly cheap and provide good nutrients. (Riley, 2018) If a
substitute for oranges were developed, then I guess it would depend on the price and what
nutrients it offered as well as the taste to determine if people would buy them over oranges. If
there was a shortage, then people would probably just buy something else instead of paying more
for an orange.
