Elasticity

This paper will prove that some products or services sell differently than others depending on their substitutions. Often times these differences depends heavily on the price, numbers, availabilities, etc. with in category. This paper will also discuss and cover the following questions that will be broken into the following parts:ØPart One: Is the price elasticity of demand for said product price elastic or price inelastic? Based on this determination what would be the impact of raising the price of the product? What would be the impact of lowering the price of the product?ØPart Two: What has happened to the price of the substitutes and complimentary goods/ services for your selected product over the last year?ØPart Three: How have price adjustments affected the demand for the selected product?There are four key concepts that are taken into consideration within this type of process as well as the process gained from the simulation.

The illustration that accompanied Marshall's origi...

Perfectly inelastic demand

Perfectly elastic demand

ØPrice Elasticity: Price Elasticity of Demand the percentage change in quantity demanded divided by the percentage change in price. Price Elasticity of Supply the percentage change in quantity divided by the percentage change in price. (Colander, 2004)ØSubstitute: Goods that can be used in place of one another. (Colander, 2004)ØComplements: Goods that are used in conjunction with other goods. (Colander, 2004)ØIncome: Payments received plus or minus changes in value in one's assets in a specified time period. (Colander, 2004)I have chosen to talk about child daycare services offered my nannies. My reason's for choosing this topic is because I find it to be very price elastic in the concept that there are several substitutes. This topic is also one that affects many people and I feel it is an important topic. Economics deals with money, products, services, competition, etc and with in the childcare community is a lot of that. There...