Chapter 7.2, Problem 1R

To determine

To evaluate: The importance of demand schedule, demand curve, complementary good, elasticity, price elasticity of demand, elastic demand and inelastic demand.

Explanation of Solution

Most commonly a demand schedule comprises of two columns. The very first column lists the prices in ascending or descending order for a commodity. The second column shows the quantity of the desired or requested commodity at that amount. The price is calculated depending on market analysis. For business enterprises, demand schedule is important. They are the source of several valuable insights for business decision-making

The demand curve is significant because there is a visual representation of the relation between the price of a good or service and the amount that is expected over a given timeframe. In a conventional illustration, the price should display on the left vertical axis, the quantity demanded on the horizontal axis.

A complementary service or good is significant because it is a product which is used in association with other good or service. Usually, when consumed alone, the complementary good has minimal or zero worth, but when paired with another good or service it adds to the total value of the contract. For instance, a product might be called a complement if it shares a beneficial relationship with another product offering, a mobile phone and the software it uses.

Business and economic elasticity is related to the degree to which individuals, consumers, or distributors adjust their demand or the quantity produced in reaction to price or revenue fluctuations. This is significant because it is also used to calculate the rise in demand from the consumer as a result of a good or service increase in price.

Economists use price elasticity to explain how money supply adjustment to explain the functioning of the real economy, given price changes. Some goods, for example, are rather inelastic, that is, their prices do not significantly change given changes in supply or demand,

Economists use market elasticity to describe how supply or demand changes, and consider the real economy's workings through fluctuations in prices. Some goods, for instance, are quite inelastic, meaning that their prices do not change dramatically despite changes in supply or demand

Elastic demand would be when price or other factors have a significant effect on the amount customers want to purchase. As customers respond to price changes, we will see it most often. If the price goes down a little bit, they are going to buy a lot more. If prices increase just a little, they will stop buying as much and wait to get them back to normal.

Inelastic economic demand is when people are buying around the same amount, if the price falls or goes up. This problem comes with things people need to have, such as fuel and food. Drivers have to buy the same quantity even though the price goes up. They don't buy any more, either, even though the price drops.

Economics Concept Introduction

Introduction: A market means an area in which parties involved may meet to promote the trade of goods. Commonly, the persons participating are buyers and sellers. The market can be conventional as a retail store where consumers meet face-to - face, or digital as an online market where sellers and buyers do not have direct physical contact.