Assume we are comparing Coca-Cola and Pepsi. What would be the consumer buying response to Coca-Cola if the price of Pepsi doubled?

Assume we are comparing Coca-Cola and Pepsi. What would be the consumer buying response to Coca-Cola if the price of Pepsi doubled? If the price of Coca-Cola and Pepsi remained constant, what would be the consumer’s typical buying response to these products if their income was reduced by 30%?

What if we were to compare Coca-Cola to Orange juice? Can we compare them using the same situations above? Or would you not deem Coca-Cola and Orange juice substitutes?

 

  1. There are many thoughts and ideas around economics. In general if ‘a’ happens, ‘b’ will happen type scenarios. However, if a consumer has a true passion for something, do you think it could cause the generalities to go out the window? Can a consumers strong preference cause these general ideas to be invalid? Or would it be more fair to say, the general ideas would be valid… up to a certain point?

 

  1. “In that extreme situation, where a price change results in no change whatsoever in the quantity demanded, economists say that demand is perfectly inelastic.” (pg. 357) Would this lead us to believe that there could be certain products where price would not be an object of consideration? No matter what the price, we would still purchase it?The text gives the example of an acute diabetic’s demand for insulin or an addicts demand for heroin.

    Are there other products we can think of where the demand is perfectly inelastic? I can think of several medical situation where this would be the case, but can we come up with something outside of that?

Reference:

McConnell, C., & Brue, S. (2005). Economics: Principles, problems and policies (16th ed.).     New York, NY: McGraw-Hill.

 

 

  1. There are many thoughts and ideas around economics. In general if ‘a’ happens, ‘b’ will happen type scenarios. However, if a consumer has a true passion for something, do you think it could cause the generalities to go out the window? Can a consumers strong preference cause these general ideas to be invalid? Or would it be more fair to say, the general ideas would be valid… up to a certain point?

QUICK QUOTE

Approximately 250 words