Economics Essay: Price Elasticity, Oligopoly, Climate Change

ECONOMICS ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
a) Price elasticity of demand and economic determinants...............................................................3
Concept and types of Price Elasticity and its importance............................................................3
Elasticity of demand estimates and their magnitude....................................................................6
Role of elasticity of demand while setting price..........................................................................7
B.......................................................................................................................................................7
discuss the key features of oligopoly...........................................................................................7
Brief description of the car manufacturing industry and its oligopolistic characteristics............8
Analyse the impact of product differentiation and advertising in car manufacturing.................9
C.....................................................................................................................................................10
Causes and the economic consequences of climate change ......................................................10
Solution is attempted and proposed in Australia for addressing the problem of climate change
....................................................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
Economics is a very wide filed and deals with the study of production, consumption and
the distribution pattern in an economy. It analyses the social neds and the manner in which the
unlimited wants can be satisfied. In the current report, the price elasticity of the demand, its
different types and the various economic determinants of the price elasticity of demand will be
determined. The report will also analyse the concept of oligopolistic market and this has been
explained by giving appropriate examples specifically of the car manufacturers. Lastly, the
economic impact o the climate changes and the actions that have been adopted in order to
forestall such impacts will be identified and discussed.
MAIN BODY
a) Price elasticity of demand and economic determinants
Concept and types of Price Elasticity and its importance
Price elasticity of demand is a concept that is defined as a measure that shows the
response or movement of the quantity demanded for a product in the market after the consequent
change in the price of that product. The increase or decrease in demand along with increase or
decrease in the price is termed as the price elasticity of demand of that product (Coglianese and
et.al., 2017). The formula for the elasticity is:
Price Elasticity of Demand: (percentage change in quantity demanded)/ (percentage
change in price)
There can be five major types or categorizations of price elasticity of demands and these can be
segregated as:
Perfectly Elastic Demand (Ep= ∞): Under this, the price of the product remains constant i.e.
there is a negligible change where a small fall in price either leads to infinite increase in the
quantity demanded or a small increase in price makes the demand falling down to zero. This is
therefore termed infinite elasticity and rarely has a practical application.

Perfectly Inelastic Demand (Ep= 0): This kind of inelasticity occurs when the price of
particular good, increases or decreases but the quantity demanded in market of that good remains
constant. Therefore, this zero elasticity leads to the situation being termed as perfectly inelastic.
Relatively Elastic Demand (Ep> 1): Under this the % change in the demand of the product is
relatively higher than the % variation in the price of that product i.e. the change in the price is
relatively lower and the consequent change in the quantity demanded is higher.