Overview of Task
1.Find two goods or services that have very different demand elasticities. This is assuming you understand elasticity according to chapter 5. Hint, go read chapter 5 if you have not done so.
2.Compare and contrast how people respond differently to price changes between the two goods or services that you selected. Be sure to mention how one is more elastic (slightly sloped) and the other is close to or more inelastic (very sloped).
3.Explain why it is important for both the suppliers to analyze the demand of these goods or services you found. Kudos to you if you come up with a literal graph and or numbers to illustrate your point.
4.You must research for goods and services other than the examples I provide or the textbook provides. Please make it an original analysis of elasticity.
1.Type up your response.
2.Go to the Discussion board section and make your thread and put your typed response there.
3.Respond to two other people’s threads by adding to the thread.
How will you be graded?
25% for following directions.
25% for a well written piece of information under the directions given.
25% for your first response to one person’s thread.
25% for you second response to another person’s thread.
Product 1: The Market for Insulin
People with diabetes do not have much of choice when it comes to the consumption of insulin. Without it, they would most likely experience death under various circumstances. Due to the extreme dependency on insulin, diabetics are highly vulnerable to price fluctuations of the product. Diabetics will most likely purchase the bare minimum insulin needed even if prices are very high or increasing gradually. If prices are slightly less than normal we might see an increase in the amount of insulin purchases by diabetics. However, this is difficult to determine such an instance, with a simple Google search the cheapest price is roughly $45.00 for 10 milliliters of insulin. The average price seems to be around $95.00 for about 10 milliliters of insulin. This means that the market for insulin experiences a highly inelastic demand curve. Most diabetics are going to opt to controlling their blood sugar via diet and exercise in order to avoid purchasing additional insulin at a routine basis. Analysis of this market prompts the conversation for other implications that could concern public policy. Some people might argue that it is the government’s responsibility to control the price of insulin in order to protect diabetics from facing financial burden due to having a disease with no cure.
Product 2: The Market for Oranges
Unlike insulin, oranges do not play a significant role in preventing death for diabetic; at least directly. Most people like oranges and arguably care more about good prices for oranges rather than maintaining a certain quantity at all times. In this sense the demand curve for oranges is going to be mostly elastic and not as steep as you would find with insulin. We could conclude that when prices are about $1.00 per an orange people will significantly purchase less oranges than if they $0.50 per an orange. Personally I eat an orange almost daily, every week when I purchase oranges I am more inclined to purchase an additional orange if the price is slightly lower than $0.60. Often times the price gets as a high as $0.80 and I often buy apples instead. My decision to purchase organs is very sensitive to its price. If farmers aren’t careful about how they predict prices for oranges or the yields they produce, prices could get too high to a point they just end up sitting in the grocery store.