elastic demand

If the product has an elastic demand, a greater portion of the tax will be absorbed by the seller.

A PC company has a perfectly elastic demand curve.

This is because goods with elastic demand cause a large decline in quantity demanded for a small increase in price.

Thus, the bar sets a lower price for entry for university and college students because students have elastic demand.

A competitive company has a perfectly elastic demand curve meaning that total revenue is proportional to output.

Elastic demand is where demand falls as fast as prices rise, controlling prices.

For example, seniors have a more elastic demand for movies than do young adults because they generally have more free time.

For a PC firm this equilibrium condition occurs where the perfectly elastic demand curve equals minimum average cost.

From the producers' point of view, the powerfully addictive quality of sugar became an important asset, resulting in an almost infinitely elastic demand.

This means that an individual firm's demand curve is downward sloping, in contrast to perfect competition, which has a perfectly elastic demand schedule.

Boyce et al. (1988) summarize the research on Network Equilibrium Problems, including the assignment with elastic demand.

Perfect competition, a theoretical market structure that features no barriers to entry, an unlimited number of producers and consumers, and a perfectly elastic demand curve.

On the other hand, a competitive firm by definition faces a perfectly elastic demand, hence it believes which means that it sets price equal to marginal cost.

Such innovative approaches not only give new opportunities to attract customers, but also open up entirely new fields of business so that their use has very elastic demand.

Then by rearrangement of (2.3): Hence, margins on goods in relatively elastic demand should be lower than those on relatively inelastic demand.

Of course the converse also applies - if the indirect taxes are levied on goods with elastic demand curves, both income and substitution effects will be small.

Demand and supply: If a country has elastic demand and supply it gives more gains from trade vice-verse with inelastic demand and supply.

As the two accompanying diagrams show, perfectly elastic demand is represented graphically as a horizontal line, and perfectly inelastic demand as a vertical line.

Perfect competition is the only market form in which price discrimination would be impossible (a perfectly competitive company has a perfectly elastic demand curve and has zero market power).

For any monopoly, the price markup should be inverse to the price elasticity of demand: the more elastic demand for the product, the smaller the price markup.

In order to sustain price discrimination between the two sets of purchasers, it may decide to integrate into the area of relatively elastic demand and charge a high price to the other.

A perfectly elastic demand curve is horizontal (with an elasticity of infinity) whereas a perfectly inelastic demand curve is vertical (with an elasticity of 0).

Large as they were, the merged firms would still be small in relation to European or world markets, and would face relatively elastic demand curves which gave little scope for raising price above marginal cost.

For example, airlines routinely engage in price discrimination by charging high prices for customers with relatively inelastic demand - business travelers - and discount prices for tourist who have relatively elastic demand.

According to Ramsey, as to minimize deadweight losses, one must increase prices to rigid and elastic demands in the same proportion, in relation to the prices that would be charged at the first-best solution (price equal to marginal cost).