Understanding Price Elasticity of Demand: A Detailed Analysis

by | Nov 13, 2023 | economics

Review chapters 4 and 5 of your textbook, Principles of Microeconomics and Price elasticity of demand using the midpoint method | Elasticity | Microeconomics | Khan AcademyLinks to an external site..

It is essential that the quantity of goods and services should be produced according to the demand for these products. The knowledge of elasticity of demand helps in determining this output level.

For the Elasticity of Demand Assignment, you will submit a worksheet and a paper in Waypoint.

In the Elasticity of Demand Worksheet Download Elasticity of Demand Worksheet, calculate the following:

Price Elasticity of Demand
Percentage Change
Revenue
Based on the readings for the week and your calculations from the worksheet, answer the following questions:

In your paper,

Explain what elasticity of demand means in your own words. Support your explanation with a suitable example.
Describe the relationship between elasticity of demand and revenue when the prices are changed. [Hint: make sure to refer to the worksheet]
Rank the demand of these three goods by their expected price elasticities of demand from most elastic to least elastic 1) a blue colored iPhone 2) a smartphone 3) iPhone.
Explain why you ranked the goods above in the way you did.

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

Sample Answer

Sample Answer

 

 

Title: Understanding Price Elasticity of Demand: A Detailed Analysis

Elasticity of demand, a fundamental concept in microeconomics, measures the responsiveness of quantity demanded to changes in price. To illustrate this concept further, let’s consider the examples of gasoline and designer handbags. When the price of gasoline increases, the quantity demanded may not decrease significantly, especially in the short term, as consumers often have limited alternative options for transportation. This indicates an inelastic demand for gasoline due to its necessity for daily commuting and other essential activities. Conversely, when the price of a luxury item such as designer handbags increases, consumers may significantly reduce their purchases, leading to a more elastic demand. This difference in consumer responsiveness to price changes demonstrates the varying elasticities of demand for different goods.

The relationship between elasticity of demand and revenue is crucial for businesses and policymakers. When the price of a good is increased and the demand is elastic, the total revenue will decrease. For example, if the price of a certain brand of smartphones is increased significantly and consumers have various alternative options available, they may switch to other brands or delay their purchases, leading to a substantial decrease in total revenue. On the other hand, when the price is increased and the demand is inelastic, the total revenue will increase. For instance, if the price of a life-saving medication that has no close substitutes is increased, consumers are likely to continue purchasing it despite the price hike, resulting in higher total revenue for the producer.

In addition to these examples, the textbook chapters provide further insights into the concept of price elasticity of demand. The chapters delve into the factors that influence the elasticity of demand, such as the availability of substitutes, necessity vs. luxury status of goods, and the proportion of income spent on the good. For instance, goods with close substitutes tend to have more elastic demand, as consumers can easily switch to alternative options when prices change. Moreover, goods that represent a larger portion of consumers’ budgets are more likely to have elastic demand, as price changes have a more significant impact on purchasing decisions.

Expanding on the ranking of goods by their expected price elasticities of demand, let’s consider specific models within the smartphone category. Smartphones, being a more generic category of mobile devices with a wide range of options and prices, are likely to have a more elastic demand compared to specific models such as the blue colored iPhone or iPhone X. The blue colored iPhone, being a specific variation of the iPhone, may have a slightly less elastic demand compared to the broader category of smartphones due to its unique features and design. Finally, the standard iPhone X, being a premium and relatively unique product with a dedicated consumer base, is likely to have the least elastic demand among the three.

In conclusion, an understanding of elasticity of demand provides valuable insights into consumer behavior and helps businesses make informed decisions about pricing strategies, production levels, and revenue optimization. By considering specific examples and additional details from the chapters, we can see how elasticity of demand influences consumer choices and total revenue in various market scenarios.

 

 

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