A customer, who needs to drive to work in a Wisconsin winter, has a critical need to use the product Ice Melt. For him as a consumer Ice Melt has an inelastic demand because he needs to drive to work. Which type of factor is affecting elasticity in this scenario?

Question

Queen Bee

Business

22 May, 03:45

A customer, who needs to drive to work in a Wisconsin winter, has a critical need to use the product Ice Melt. For him as a consumer Ice Melt has an inelastic demand because he needs to drive to work. Which type of factor is affecting elasticity in this scenario?

+3

Answers (1)

Know the Answer?

Jaydin Walton · Answer 1

Urgency / Postponement leads to customer inelastic demand of ice melt.

Explanation:

Elasticity of demand is responsive change in demand of good, due to change in price. Formula = % change in demand / % change in price

Factors Affecting Price Elasticity of Demand : Nature of commodity, Income, substitutes availability, time period, urgency / postponement, share in total expenditure,

Inelastic Demand is when demand responds proportionately less to price change. % change in demand < % change in price

Case 'Customer critically needs ice melt to drive to work' : This has inelastic demand i. e demand less respondent to price changes (he will buy that at high price too). Such because of the urgency of this demand & less scope of its postponement.