In business and economics, elasticity refers to the degree to which individuals,consumers, or producers change their demand or the amount supplied inresponse to price or income changes. It is predominantly used to assess thechange in consumer demand as a result of a change in a good or service's price ProductPrice elasticity Income elasticityConsumer durablegoods0.9 1.5Foreign travel 1.8 3.3Bread 0.1-0.2Milk0.20.0Fresh meat 1.40.0Wine 1.22.6Petrol (0.5 long run) (1.0, shortrun)1.3Beer 0.40.5i. Explain the values of price and income elasticity of demand for Freshmeat, foreign travel, and Bread, Beer, petrol and consumer durables.ii. With reference to the price elasticity values comment on theirimplications for pricing policies in the industries concerned.

1) The goods Consumer Durable, Foreign travel, Wine and Petrol are said to be the luxurious goods as…

Answered: In business and economics, elasticity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In business and economics, elasticity refers to the degree to which individuals,
consumers, or producers change their demand or the amount supplied in
response to price or income changes. It is predominantly used to assess the
change in consumer demand as a result of a change in a good or service's price

Product	Price elasticity	Income elasticity
Consumer durable goods	0.9	1.5
Foreign travel	1.8	3.3
Bread	0.1	-0.2
Milk	0.2	0.0
Fresh meat	1.4	0.0
Wine	1.2	2.6
Petrol	(0.5 long run) (1.0, short run)	1.3
Beer	0.4	0.5

i. Explain the values of price and income elasticity of demand for Fresh
meat, foreign travel, and Bread, Beer, petrol and consumer durables.

ii. With reference to the price elasticity values comment on their
implications for pricing policies in the industries concerned.

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