Can you give examples of goods or services with elastic and inelastic demand?. How does elasticity affect pricing strategies?

Sure!

Examples of goods or services with elastic demand include luxury items such as designer clothing, high-end electronics, and vacation packages. When the price of these items increases, consumers are more likely to cut back on their purchases or switch to cheaper alternatives.

Examples of goods or services with inelastic demand include necessities such as food, gasoline, and prescription medications. Even if the price of these items increases, consumers are still likely to purchase them because they are essential for daily living.

Elasticity affects pricing strategies by influencing how much a company can increase or decrease prices without significantly impacting demand. For goods or services with elastic demand, companies may need to lower prices to attract more customers and increase sales volume. On the other hand, for goods or services with inelastic demand, companies may be able to raise prices without losing a significant number of customers, leading to higher profits. Understanding the elasticity of demand for a product or service is crucial for determining the most effective pricing strategy.