Price Elasticity of Demand for Housing, Electricity, and Healthcare

This article discusses the concept of price elasticity of demand for housing, electricity, and healthcare. It explores how changes in price affect the demand for these commodities and the factors that influence their elasticity. The article also examines the implications of price elasticity on the housing market, electricity consumption, and healthcare services.

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PRICE ELASTICITY OF DEMAND

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Price Elasticity of Demand for Houses
This is the degree of the sensitivity of the magnitude of housing that is provided to the
variation in the rate of housing. In terms of numerals; it refers to the proportion of the percentage
variation in the magnitude of housing provided to the percentage adjustment in the price of
houses (Rachel , Nicole , Christopher , & Steven , 2017, p. 34). In one extreme, there is perfectly
inflexible supply when the value pliability of lodging supply is zero and these types of changes
in the housing supply will have no influence on the amount of houses supplied. It is a case
whereby the price elasticity of housing is expected to be zero (Liu, 2019, p. 70). On the other
extreme, there is perfectly elastic housing supply whereby a trivial change in the house prices
will lead to a large change in the quantity of houses that are supplied.it is a case whereby the
housing supply is infinite. An elastic measure that is greater than one would generally mean that
there is elastic supply while an elastic measure of less than one would indicate an inelastic
supply (Rachel , Nicole , Christopher , & Steven , 2017, p. 57).
The prominence of housing receptiveness to the well-being of economy cannot be ignored.
A poor supply of housing will lead to instability in the macroeconomic sector and will at long
run hinder the labor market flexibility and thus constraining the economic growth (Xian, Yu ,
Eddie , HUI , & Linzi , 2018, p. 89). Lack of responsiveness to the housing supply also known as
inelasticity in the housing supply can impact the economy through to primary channels. It can at
first show negative impacts on the stability of macroeconomic stability; which is a demand side
impact and it can also impede the labor arcade suppleness which is a supply side implication
(Debarpita, 2018, p. 132). However, the overall effects of the housing elasticity is subdued
economic growth whereby the economy will operate below its full potential since the housing
markets will fall in order to adjust to the demand shocks.

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The price pliability of supply is a major determinant of the degree to which to which the
lodging market reacts to the demand shocks by snowballing the number of housing or increasing
prices.in a case whereby the accommodation supply is charge inelastic, there exists adverse
outcomes for the affordability of houses since the increased demand is interpreted to the rapid
rising price of houses.
There also exist ramifications for the volatility in house prices and the macroeconomic
steadiness. When the supply of houses is value inelastic, the lodging prices turn out to be very
sensitive to the demand alterations triggered by the labor, financial shocks. The house price
bubbles are more likely to arise when the lodging supply is inelastic to prices (Debarpita, 2018,
p. 45). A tightly controlled housing supply gives courage to the homeowners to treat houses as an
investment asset which is to be held while expecting a future increase in prices and this fuels the
shortage in the housing sector and hence the house prices shoots up in the economy. Therefore,
in some cases whereby the housing supply is not responsive to the ultimatum shocks, the housing
prices will then end up revolving around a rising trend in the price of houses and this will lead to
the creation of an undesirable situation of long run volatility in the housing sector.
The impacts of the unresponsiveness of housing supply environment do not end with the
increasing and unfavorable housing prices (Xian, Yu , Eddie , HUI , & Linzi , 2018, p. 32). The
increasing house prices and house price induced debt will affect the consumption behavior of
individuals and this will have a direct impact in the financial stability.

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Price Elasticity of Demand for Electricity
The price elasticity of demand here serves as a measure of the changes in the price of
electricity affects its usage. It is used to provide a convenient, easy and precise way to measure
and interpret a performance metric since it denotes the percentage change that is attributable to a
single point change in the prices.in a situation whereby the elasticity is equal to one, a percentage
price decrease, say 10% would cause a proportionate change in the and for this matter, it would
be an equal change in the consumption of electricity (Paul , 2018, p. 47). Any elasticity which is
greater than one gives higher proportional than the adjustment usage and any vale less than one
gives a lesser proportional adjustment. The latter is achieved under the assumption that all other
factors that affect electricity consumption are kept constant.
The recent research demonstrated that the nature of how and the reasons as to why the
consumers change or adjust their usage when the price elasticity changes is very far from
simplistic it is definitely not static (Jorge , Esteban , & David , 2017, p. 132). Several factors
affect the consumers inclination and motivation to give their response to the changes in price and
these factors include; the general health of the economy (which has greater impact on the
household incomes and profitability of businesses) and the available substitutes of electricity
which are vital in the maintenance of overall welfare when there is a change in price.
The characters of prices that include the pricing plans affect the incentives to react to the
changes in prices. The frequency of the changes in prices, the time interval, season and the
magnitude of change in the price of electricity and the length of the alteration in these prices are
vital determinants of the benefits that are realized by the consumers (Chandra, Handel, &
Schwartzstein, 2018, p. 156). The latter therefore count in the degree of price elasticity.

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Ignorance of these factors when planning for prices will result to unintended and unanticipated
consequences. A variety of market circumstances can cause a shift in the utilization of electricity.
Consumers adjust their level of consumption and the pattern too in response to the changes in
prices. The latter is evident by the amount of cash per kWh used. Consumers can agree to reduce
the use of electricity in return for a lump sum payment and they would pay a penalty of they
failed to tame their consumption (Jorge , Esteban , & David , 2017, p. 46).
The effective change incurred here is the opportunity cost. The demand for electricity
reveals the standard measures of the determinants of the elasticity of demand since an increase in
the price of electricity will make the consumers change their consumption behavior since their
income will be affected when the price of electricity changes (Jorge , Esteban , & David , 2017,
p. 45). The increase in the price of electricity will also have an impact on their income and hence
the consumers will also have to alter their consumption behavior so as to save on their income
(Teng, Burke, & Liao, 2019, p. 154).
Price Pliability of Ultimatum for Healthcare
In spite of the different experiential methods and data foundations available, the
ultimatum for healthcare has shown consistency in the elasticity in its price. The range of price
elasticity estimates in this matter appears to be very extensive and inclines to center on -0.17
meaning that a unit percentage surge in the charge of healthcare will definitely result to 0.17 %
drop in the expenditure in healthcare (Ellis, Martins, & Zhu, 2017, p. 232). The price prompted
variations in the ultimatum for healthcare can be accredited to the fluctuations in the profitability
of retrieving a given healthcare instead of the changes in the trips made once a patient accesses

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healthcare (Mahlich & Sruamsiri, 2019, p. 67). There are also lower levels of demand elasticity
at the lower levels of cost sharing.
Demand for healthcare services is revenue inflexible. The income pliability approximations
in this case are under an assortment of 0 to 0.2 (Ellis, Martins, & Zhu, 2017, p. 245). The
affirmative sign of elasticity degree shows that a fraction of revenue increased with an increase
in the demand for healthcare. The degree of elasticity nevertheless suggests that there is a
relatively low response to the demand (Zamzaireen, Rosliza, Lim, & Jun, 2018, p. 187). The
studies that have been done on the time series data suggest that there is greater revenue pliability.
The differences that occur thru time are caused by the incorporation of the impacts of the
alterations in the health expertise that utilize the long time series of statistics.
The ultimatum pliability for Medicare is generally low. However, particular types of care
are generally price sensitive. Examples of these kinds of healthcare include preventive care and
pharmacy gains. The latter have been noted to have large price elasticity. The ultimatum for
precautionary care is more subtle than the ultimatum for any other type of healthcare. The
availability of substitutes is a primary determinant of the elasticity of demand. As far as
healthcare is concerned; there are several goods and services that can serve as surrogates
(Horenstein & Santos, 2018, p. 51). When the prices of healthcare goes up, the consumers will
therefore have a choice of shifting to the substitutes and avoid the preventive care. They will
consume those alternatives which promote health including the nutritional complements and also
healthy foods. Precautionary therapeutic care services may also be considered as more of a
luxury good than a necessity good. When the price of preventive healthcare price goes up, then
the consumers may then cut off the preventive medical care services.

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The opportunity cost of acquiring precautionary medical care is relatively greater than
when in a situation whereby one falls sick and they have to see the doctor and particularly when
the patient needs to see a doctor severally. The benefits of pre-emptive healthcare in the long
term are in most cases reduced and thus it might not be necessary for an individual to demand
preventive healthcare (Yeung, Basu, Hansen, & Sullivan, 2018, p. 37). The differences that exist
in the inelasticity also replicate the fact that precautionary healthcare and the medicament drugs
administered are not roofed by insurance.
There is also a growing attention of the growing demand for the health insurance and the
sensitivity of ultimatum for the healthcare policies to alter prices of healthcare insurance. The
latter is important when we consider the demand for healthcare services that are delivered by a
certain healthcare plan (Zamzaireen, Rosliza, Lim, & Jun, 2018, p. 52). Any modification in the
cost will have a direct impact on the number of the people that enroll and this will have a direct
impact on the services paid for the particular plan.
The cross price pliability of ultimatum in the case of healthcare measures the impact of
variation in the value of a particular commodity or overhaul on the ultimatum for an alternative
product, it can for instance be employed to calculate the proportionate change in the magnitude
of good X which is required resulting a 1% increase in the price of another product, say y. Cross
price elasticity is therefore depended on two goods. In a case whereby the two goods are close
replacements, therefore cross price elasticity is expected to be positive. In a case whereby the
own price elasticity of demand is greater than one, then the demand is said to be elastic (Mahlich
& Sruamsiri, 2019, p. 69). In a case whereby the ultimatum is flexible, the clients are very subtle

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to any slight change in price. A little alteration of price will cause a large effect in the amount of
the commodity demanded. If the springiness of ultimatum is less than one, then the demand is
rigid and hence the consumers do not respond sensitively to the change in price. The ultimatum
for healthcare is therefore projected to be relatively rigid to a large extend because since there are
very few close substitutes for medical care.
The table below is used to show the cross price pliability of demand for healthcare and
their effects.
(Yeung, Basu, Hansen, & Sullivan, 2018, p. 142).
Conclusion
Price elasticity of demand for a particular commodity is determined by a variety of factors.
Different types of goods have different kinds of elasticity. As discussed earlier on, the price
elasticity of demand for housing is different from the price elasticity of demand for electricity

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and so is the price elasticity of demand for healthcare services. Demand for healthcare is inelastic
since there are no close substitutes while demand for housing is highly elastic. Demand for
electricity on the other hand is said to be relatively inelastic.

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