How do I determine whether a product is elastic, inelastic, or unit elastic?
Answer:
I'm assuming you are talking about the elasticity of demand. Elasticity is willingness of buyers to buy a product when their is a price change.
The basic formula is the absolute value of the percent change in quantity demanded divided the percent change in Price.
Ed = |%ΔQ d / % Δ P|
If the ratio is below one the Ed is inelastic. At one then the Ed is unitary and is above one, elastic.
You can tell this by the formula. If a buyer is inelastic to the change in price then denominator will change more than the numerator (Ed<1). If the demand is elastic, then the change in Quantity demanded will be higher than the change in price (Ed>1)
Not sure if you mean theoretical or actual.
There are formulas for all of these things, that are useful if you have some data (real or simulated), but the theory works regardless.
An elastic good is one people by less if the price goes up (or vise versa), an inelastic good is one people don't buy less if the price goes up (or vice versa), etc.
If you are talking about an actual product you would need some price and quantity demanded/sold data to figure it out.
If you are instead talking about what the actual formulas are should you have data, just do a quick google or wikipedia search, there are plenty of resources out there on the web explaining not only the formulas but showing them in action. Do a little searching, it shouldn't be hard to find what you need.
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