Elasticity deals with change and the degree of response to change. For
example, if it is drizzling outside, you may continue to play golf, swim, or do yard work outdoors. The weather changed only slightly and this may cause very little response from you as you decide whether to remain outdoors or not. But if it starts to rain heavily, you may be more responsive and decide to go inside.
Now, think about a product you purchased recently at the grocery store or at the Mall. The next time you go to purchase this item, let’s say you find out that the price has increased by X dollars. How would you respond to this price increase? Would you say this item is Relatively Elastic, Relatively Inelastic, or Unitary Elastic? Explain using the Determinants of Price Elasticity of Demand. Make sure to analyze it using an economic perspective.
Determinants of Price Elasticity of Demand
Consumer products are responsive to price changes within the economy. Cakes are among the