Give an example of a good you purchased for which your own demand is elastic and

Question

Give an example of a good you purchased for which your own demand is elastic and another example of a good for which your demand is inelastic.  (Tip:  if you are having a tough time thinking of products or services you bought, think back to your purchases within the last 3 months.  See example in Point 1 below.)

Share with the class:

1.What two products or services did you buy?  State whether they are elastic or inelastic, estimate their elasticity coefficient and explain why they are elastic or inelastic.   (example: Honda car, Elastic, 4.0 – I shopped around for the best model of car for the price.  Medical care, Inelastic, 0.2 – when I am sick I must go to a doctor in order to feel better, so the price is not an important factor)

2.Do you consider yourself to be price sensitive?   Give a rating on a scale of 1 to 10, with 0 = not price sensitive at all and 10 =  extremely price sensitive.  Explain why and provide an example.

3.Suppose your income at the time you purchased these items now suddenly tripled e.g. went from $30,000 to $90,000 annually. Would you still buy the same items or something else?  If so, what would you buy?  

4.Based on your answer in #3, does that make your items inferior or normal goods? 

5.For fun, imagine you are now one of the Kardashians. State which one you are (e.g. Kim, Khloe, Rob, etc).  Would they buy something else instead of your original purchase? What would the Kardashian purchase instead?  (For instance, say you bought a pair of Levi jeans.  I'm guessing but I don't think that Kardashian would be seen in a pair of Levis.  So, instead, they bought a Gucci brand instead!  Have some fun with this!!)
 

Explanation / Answer

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Answer-

1.What two products or services did you buy? State whether they are elastic or inelastic, estimate their elasticity coefficient and explain why they are elastic or inelastic.

Answer- Product 1 will be mac book pro, elastic, 3.0 is the elasticity of a computer product. The product is elastic because of the simple reason that the purchase could have been delayed or the price range could have been altered to accommodate a cheaper product in the same price.

Product 2 is emergency ambulance service. The elasticity is 0.3 inelastic demand. The reason behind this is that the person has met a trauma incident and he has to be taken to the hospital and the cost incurred to avail a private emergency ambulance is inelastic as this service cannot be delayed or replaced.

2.Do you consider yourself to be price sensitive?   Give a rating on a scale of 1 to 10, with 0 = not price sensitive at all and 10 = extremely price sensitive.  Explain why and provide an example.

Answer- rating would be 0, the reason being I have purchased a laptop, which was priced exceedingly high instead of cheaper options and not thought of the rate of declining utility of the product. Hence this approach towards the demand and resource utilization makes me least price sensitive.

3.Suppose your income at the time you purchased these items now suddenly tripled e.g. went from $30,000 to $90,000 annually. Would you still buy the same items or something else? If so, what would you buy?  

Answer- I might buy something else that is a helicopter emergency service or an in house hospital if my income would have tripled. I would have also gone for a more expensive laptop with this increase in income.

4.Based on your answer in #3, does that make your items inferior or normal goods?

The laptop would be inferior goods as the more expensive one will have lesser marginal rate of utility considering the higher price point than the previous one. However the emergency ambulance service is a normal good.

5. For fun, imagine you are now one of the Kardashians. State which one you are (e.g. Kim, Khloe, Rob, etc).  Would they buy something else instead of your original purchase? What would the Kardashian purchase instead?

Answer- I would assume to be Rob. They might want a different laptop imported from a different country or having more appealing outer features and expensive one. However they might not be in a situation to replace an emergency ambulance service.

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