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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?

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  1. 22 May, 03:55
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    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.
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