1- That would be inelastic. Even though people gripe about the rising prices, that doesn’t stop people from stopping by the gas pumps to fill up. Elastic is more like candy bars or soda; if priced at 50 cents, there will be high demand, but if the price rises to 2 dollars, the demand will go down. Because there are many alternative brands for Coca Cola that have more or less the same taste. When the price of coca cola rises, demand decreases because consumers will find alternative brands that taste the same but at a lower price, therefore demand is elastic.
Demand for soft drink as a whole is inelastic because whether or not the price increases/decreases, demand would not decrease/increase by a whole lot, since it’s the consumers’ preferred choice of drinks (just like milk is inelastic). Just because the price increases, doesn’t mean that consumers will start to drink water all the time, they’ll just drink less amounts of soft drink than usual (and vice versa).
Elastic means by increasing the price, the demand for that product decreases as well.
For example when the price of lamb increases, people will shift to chicken. We say the demand for lamb is elastic. Inelastic means, no matter how much the price changes, people still use it and the demand doesn’t change a lot. Same as your example, Although the oil price increases, but the demand for oil didn’d decrease. 2-petrol is also sold from especialy designed petrol pumps which costly to buld and operate .
in the other hand coke and soft carbonated drinks is sold everywhere and can be sold to anyway and any gae. patrol selling you must be an adult and hold a drivers licience .
Gas in the long term has higher elasticity of demand. meaning since in short term people do not have much choice,so they consume whatever is available at whatever price. 3- the coke is advertosed on over hundered tv channels around the world and it is the best known trademark in the world is sold in about one hundred and forty countries to 5. 8 billion people in eight different languguages .
The cross price elasity of demand would be for the coca cola since the demand for it is growing A third example of cross-price elasticity is between Coke and Pepsi. If the price of Coke increases by 10%, then the demand for Pepsi will increase by 20%.
This results in a cross price elasticity between the two of 2. Like the example above, these two would be substitues since the cross-price elasticity is greater than zero. http://mbaecon. wikispaces. com/file/view/cross_2. gif/30502983/cross_2. gif.
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