Question

Whenever a natural disaster, like a hurricane, occurs, we see examples of elasticity arise all over the place. For example, when Hurricane Harvey struck Houston, there was a resulting gas shortage which drove up the price of gas for a time. With that in mind, many people began to make plans. As soon as I knew Harvey might hit Houston, I went and got gas. (I did that every day till prices started to rise.)

Therefore, knowledge and time both effect how I respond to price changes. Since I had an expectation that the price of gas would rise drastically, I was able to prepare for that price rise.
What is an example in your life where elasticity shows up?
How does time play into how responsive you are to a price change?
What does knowledge and expectations do for that responsiveness?

Answer 1

Elasticity is a concept that is used to measure the responsiveness of consumers to changes in price . In my case, I can think of an example where elasticity shows up when I am shopping for groceries. When I am shopping for groceries, I am more likely to buy items that are on sale or that have a lower price than usual . This is because I am more responsive to changes in price when it comes to groceries. Time plays an important role in how responsive I am to a price change. If I have more time to shop around and compare prices, I am more likely to be responsive to a price change . Knowledge and expectations also play a role in how responsive I am to a price change. If I have knowledge about the product and its price history, I am more likely to be responsive to a price change . Similarly, if I have an expectation that the price of a product will rise or fall in the future, I am more likely to be responsive to a price change .