Relative Price Elasticity:
Relative price elasticity could be explained as the changes in the process, due to the large effect on the quantity, of the product that is demanded.
In the case of the mayonnaise, the regular mayonnaise it could be said to have the relatively low price elasticity because the people like to buy it and there is a very low cost of mayonnaise as compared to the income of the people, so people would buy it.
A Specific Brand of Mayonnaise:
The specific brand of mayonnaise, it could be said that there can be the relatively high price elasticity, because the competition will be there in the market, there can be another choice from competitors and the other sauces, mustard, Greek yogurt etc. thus, there could be changes in the prices with respect to changing demand.
The demand for the cars is said to be less elastic, when it relates to the price because there are fewer substitutes in the market, it could be an easy substitute for the cars Toyota or Ford. Therefore, the market demand curve of Chevrolet would be in favor, as a customer will buy it and motorbike or skateboard for the cars can be its substitute.
Again it could be said that demand for Jaguar automobiles is said to be less elastic, when it relates to the price because there are fewer substitutes in the market, it could be an easy substitute for the cars BMW or Ford. Therefore, the market demand curve of Jaguar would be in favor because the customer has the preferences and the prices will not change with increasing or decreasing demands, the customer will buy it and motorbike or skateboard for the cars can be its substitute (Pingolia, 2014).
An Elastic Demand Curve:
There can be the benefits of the decrease in prices. When the company faces the elastic demand and there is the decrease in the price, it could be said that there will be the increase in demands because the law of demand states that the quantity demanded increases with the decreasing prices of the products, so the companies get better revenue because of the demand determined. It is true that inelastic demand or the elastic demand curve can generate the revenue for the company; however, there could be the competitors in the market so the businesses could be benefitted (Reiss, 2013).
The Postal Service:
The Postal service has increased its prices, thus, the result was in the reduction of its demand because the relevant economic concepts said that the competitors and the substitution can affect the companies and postal services have the substitute in the market that is inexpensive or cheap. However, Postal service increased in the prices, make the competitors able to decrease the prices, example, United Parcel Service, and Federal Express are creating the competition in the market focusing on the elastic demand curve, moreover, there are the substitute products in the market. Therefore, the price of a substitute good falls, consequently, the prices of fax and e-mail services are relatively very low and in higher in demand.
- Pingolia, K. (2014). The elasticity of Demand – Class XII: by Kapil Pingolia. Kapil Pingolia.
- Reiss, J. (2013). Philosophy of Economics: A Contemporary Introduction. Routledge.