Uses and habit forming commodity -price elasticity of demand, Microeconomics

Uses and Habit Forming Commodity -price elasticity of demand:

The number of possible uses:

A commodity has high price elasticity of demand (or elastic demand) if it can be put into so many users. With such a commodity, if the price changes, the responses of quantity demanded to the price change becomes significant when changes in quantity demanded for each use are put together. For instance, a commodity such as sugar is used for direct comsumption, baking bread and cake, making jam etc. Thus,
the demand for sugar may be fairly elastic.

Habit Forming Commodity

Some commodities are habit corming while others are not.For habit forming commodities, they tend to have less elastic or inelastic demand because once the habit is formed it is abit difficult to break away from it when the price of the commodity increases even significantly. For instance, once the habit of smoking cigarettes is formed, it is difficult to break away when the price of cigarettes rise. Non-habit forming commodities tend to have more demand.

Posted Date: 1/2/2013 7:03:05 AM | Location : United States







Related Discussions:- Uses and habit forming commodity -price elasticity of demand, Assignment Help, Ask Question on Uses and habit forming commodity -price elasticity of demand, Get Answer, Expert's Help, Uses and habit forming commodity -price elasticity of demand Discussions

Write discussion on Uses and habit forming commodity -price elasticity of demand
Your posts are moderated
Related Questions
Economic instruments Financial rewards, incentives and penalties that operate automatically via market forces, to encourage beneficial behavior.

Meaning of absolute cost difference and comparative cost difference.

What are the economies and diseconomics of scale?

Ask qu a.Fill in the column of marginal products. What pattern do you see? How might you explain it? b. A worker costs $30 per day and the ''Firm has fixed costs of $10. Use this

explain land as a part of the four factors of production

draw the demand curve,when there is rise in the price of a product on the demand of the product

A trust is build to acquire shares in organizations for subsequent allocation to employees over time by time.

comprehensively discuss the market structure in the South African mobile telecommunication industry

the prevalence of excess capacity is the direct consequence of the existence of monopolistic competition

discuss scarcity,choice and opportunity cost