Reference no: EM13962446

Give an example of a product or service for which you have a very price inelastic demand (i.e. you'll continue to purchase about the same even if the price goes up quite a bit). A product or service with a price inelastic demand is one that gives the marketer some freedom to raise the price (and not much incentive to lower the price). Also give an example of a product or service for which you have a very price elastic demand (i.e. you'll purchase much less if the price goes up even a little). A product or service with a price elastic demand is one that doesn't give marketer much room to raise the price without significantly hurting sales, but a price cut could result in much higher sales. Explain the reason for your price elasticity or inelasticy for each product (or service). For example, my family has a very price inelastic demand for milk. Wanting my kids to have the calcium, protein, vitamins A and D, and other nutrients in milk, if its price were to double, I'd still purchase exactly the same amount I do now. Conversely, my favorite kind of soda is root beer, but if the price of root beer were to increase 25%, I'd probably shift more than 50% of my root beer purchasing to cherry cola (my second favorite type of soda). Since the change in quantity is so much more than the change in price, I clearly have a price elastic demand for root beer (the quantity I'll purchase stretches like elastic in response to a change in price).