2. Name a relatively inexpensive product that you purchase on a regular basis. If the price of that product increased by 25% how would you react? Why is your response elastic or inelastic?
3. Name a relatively expensive product that you purchase less frequently. If the price of that product increased by 25% how would you react? Why is your response considered to be elastic or inelastic?
4. Let's consider the price of gasoline. It has been changing a lot over the course of the last few years. How have you responded to the changes? Explain your reaction to the change in terms of it being either elastic or inelastic.
5. Would you react differently if you believe that increased gas prices will be temporary (short run) as opposed to being a long run phenomenon? How so and why?
A brief guide:
On question no. 1:On the onset of drought, water usually becomes scarce and costly. The movement of the supply curve of water during drought moves leftward which is normally the reaction of any product or services that are scarce. As drought continues, the price of water goes up. You can expand the discussion be showing a graphical representation.
Question no. 2 can be answered by naming products consumed or used everyday like drinking water, cigarette, wine, medication, toothpaste or shampoo. Naturally, ...
The solution discusses elasticity and inelasticity issues.A guide discussion is found in the attached file.