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Q: When decieding to lower a two bedroom apartment rent, explain how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy.
A: Price elasticity, or people’s sensitivity to price changes, affects the demand for products. Think about a pair of sweatpants with an elastic waist. [ You can stretch an elastic waistband like the one in sweatpants, but it’s much more difficult to stretch the waistband of a pair of dress slacks. Elasticity refers to the amount of stretch or change. For example, the waistband of sweatpants may
stretch if you pull on it. Similarly, the demand for a product may change if the price changes. Imagine the price of a twelve-pack of sodas changing to $1.50 a pack. People are likely to buy a lot more soda at $1.50 per twelve-pack than they are at $4.50 per twelve-pack. Conversely, the waistband on a pair of dress slacks remains the same (doesn’t change) whether you pull on it or not. Likewise, demand for some products won’t change even if the price changes. The formula for calculating the price elasticity of demand is as follows. Price elasticity = percentage change in quantity demanded ÷ percentage change in price ]
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Original conversation
User: How can the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity?

User: How can the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity?

User: When decieding to lower a two bedroom apartment rent, explain how the price elasticity of demand affects a consumer’s purchasing and the firm’s pricing strategy.

Weegy: Price elasticity, or people’s sensitivity to price changes, affects the demand for products. Think about a pair of sweatpants with an elastic waist. [ You can stretch an elastic waistband like the one in sweatpants, but it’s much more difficult to stretch the waistband of a pair of dress slacks. Elasticity refers to the amount of stretch or change. For example, the waistband of sweatpants may stretch if you pull on it. Similarly, the demand for a product may change if the price changes. Imagine the price of a twelve-pack of sodas changing to $1.50 a pack. People are likely to buy a lot more soda at $1.50 per twelve-pack than they are at $4.50 per twelve-pack. Conversely, the waistband on a pair of dress slacks remains the same (doesn’t change) whether you pull on it or not. Likewise, demand for some products won’t change even if the price changes. The formula for calculating the price elasticity of demand is as follows. Price elasticity = percentage change in quantity demanded ÷ percentage change in price ]
Expert answered|MrG|Points 1003|

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Asked 9/3/2012 5:49:16 PM
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