Elastic Inelastic Essay

Submitted By RnKndllYahooCom
Words: 734
Pages: 3

Aaron Kendall
Economics Fundamentals
2/10/2015

Elasticity
There are several companies who have elasticity and have had great success and great failures according to how they have responded to the changes in the market. The first company that I see to have elastic demand is Apple because as the prices of the devices they produce rise and fall, the demand also responds accordingly. For example when apple debut the apple iPod, its capabilities such as being able to hold 500 – 1000 songs, portable, small, and with great sound and it had the ability to organize your music like no other device before it. However as the demand for the device increased, so did the demand for its capabilities to become faster and better than before. This caused the manufacturers to have to increase the price of the device due to the increase of the need for new research, and new technologies such as faster microprocessors and touchscreen technology.
Since the price of the iPod has increased, more and more people began searching for mp3 alternatives to the iPod, which offer similar features and also did not require special software for commercial use, and for a much cheaper price. In order to increase the demand for this product I suggest giving more power to the consumer. For example I suggest allowing customers to customize each feature of each device. The power to customize each feature would attract more customers who would be willing to pay the slightly higher prices for the device. Features ranging from color, material, custom engravings, custom cases etc. According to techland.com “like many Apple products, the iPod wasn’t the first device of its kind. But like many examples of Jobs’ legacy, it was the product that did it best” (Miller, 2011). However this product is losing its spunk and needs a boost, and I believe the way to do it is by offering this new feature of customizable products. This could boost the demand and keep production cost fair.
The next company that I will examine is a company that has inelasticity. The company British Petroleum, who is one of the world’s largest producers of gas. They are also responsible for the terrible oil spill in 2010 on the Gulf of Mexico. Although this disaster happened on their watch, I believe British Petroleum has inelastic demand because the demand for gas seems to either stay the same. Even if the price of gas goes up, people still need to use gas and oil to heat their homes, power their vehicles, factories, and numbers gas powered appliances. According to Wikipedia, although the taxes rise and fall for gas, the demand stays the same or, just like tobacco and fire arms. (Wikipedia, 2012) Inelastic demand means that the price does not change the overall demand for a product, and if British Petroleum’s goal is to increase demand, they will have to increase access to their products through the production of more facilities such…