Economics Assignment: Analyzing Demand and Supply, Example, Fall 2024

This economics assignment delves into the analysis of demand and supply, exploring the concept of inelastic demand and its implications. The assignment presents real-world examples such as the demand for Apple iPhones, airline tickets, and plastic surgery to illustrate the concept of inelasticity. The solution explains how the demand for these products or services remains relatively unchanged despite price fluctuations. Furthermore, the assignment discusses how companies can increase revenue by raising prices when demand is inelastic, using examples like milk and Starbucks coffee to demonstrate the principle. The assignment provides a comprehensive understanding of demand, supply and elasticity, and offers practical insights into market dynamics.

Running Head: Economics
Economics
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Economics 1
 The demand of iPhone product would be inelastic because Apple products are purchased
in the market for its uniqueness. The brand value of the company makes them unique due
to which the product seems to have no other competition in the market. Resulting in
which, the demand of new iPhone product becomes inelastic irrespective of its pricing.
 The demand of airlines ticket for the person would be inelastic because irrespective of the
change in prices, the person will travel because he wants to attend his brother’s wedding.
The service user will attain the airlines service irrespective of its pricing because he
wants to attend the wedding ceremony of his brother.
 Plastic surgery would be inelastic because it is a luxury good whose demand does not
change irrespective of its price. The service receiver will attain the service on the basis of
their willing. The person wanting plastic surgery will not look at the pricing of the
surgery because they are willing to change their looks irrespective of the pricing that the
doctor charges for the surgery.
 Plastic surgery for severe burn would also be inelastic because it is the necessity for the
patient. Also, there is no other replacement of burn surgery due to which change in prices
would not affect the demand of burn surgeries.
 Yes, it should be noted that it is possible to increase the price of the product while
reducing the number of products sold and increasing the total revenue altogether. It
should be noted that if the price elasticity of demand in lower than 1, then the rise in price
of the product would increase the total revenue for the company while reducing the goods
sold. Example of this case are, milk, Starbucks coffee, Apple iPhone etc.