Elasticity Essay Example | Topics and Well Written Essays - 1250 words

Elasticity - Essay Example The function of responsiveness of a particular variable to the change in parameters of the other variables is what elasticity is all about. The frequently used dimensions of elasticity include price elasticity of demand, price elasticity of supply, income elasticity of demand and elasticity of substitution between factors of production. Because of the immense contribution that the concept of elasticity has made to the study of responsiveness of price and other factors to changes in demand and supply, it has indeed made a significant contribution to the understanding of the market and agents in its. This is the topic for this paper and the subsequent paragraphs discuss the concept in detail along with the example of a supermarket to elucidate the concept. If we take the first dimension or the PED (Price Elasticity of Demand), this is the percentage change in the quantity demanded for a drop or rise in price and hence measures how â€Å"elastic† the demand is to a change in the price of the good. The measurement of PED is by dividing the percentage change in the quantity demanded by the percentage change in the price and since either the percentage change in demand or the percentage change in price is negative, the PED is always negative. Hence, the PED is usually expressed in terms of absolute values. Goods that have a PED of more than 1 are supposed to be highly elastic meaning that changes in price have a large effect on the change in demand. On the other hand, goods that have a PED less than 1 or between 0 and 1 are supposed to be inelastic or relatively inelastic. This is because the change in demand is not that much greater for a change in price (Ayers & Collins, 2003). If we apply this dimension to the case of the superm arket, we find that goods like alcoholic beverages and luxury products like perfumes and cosmetics are highly elastic since a drop in the price invariably leads to

New Liabilities Under The Consumer Protection Act 1987 Yusuf Belgore Essay

New Liabilities Under The Consumer Protection Act 1987 Yusuf Belgore - Essay Example Before the enactment of the consumer protection act of 1987, those injured had to prove negligence of a manufacturer to sue successfully for any damage. The act now removes this bottleneck and a customer can already sue a supplier without proof of negligence, under sale of produce law. This law applies equal right to anyone injured by the defective product whether or not the good was sold to them . The major crux, of the consumer protection act, 1987, as we have seen so far is that it seeks to protect the consumer from unwholesome practice of producers. Part 1 of this act allows people injured by defective product to sue for compensation without having to prove that the producer was negligent. All that has to be proved is that the product was defective and the defect in the produce caused injury. The law applies to all consumer products and products used at place of work. This law makes taking litigation against producers of defective goods and in fact getting redress easy for the consumer. It also opens up lapses so that manufacturers of genuinely not defective goods get sued and may end up paying compensation. What this does is to allow for a larger influx of cases into the courts (over 1500 cases were in courts last year alone with 1000 successful prosecutions ). There are cases of adverse reaction to goods that are hitherto not defective for which an injured person may sue and in fact, get compensation for such cases. This is so because the act is very strict about liabilities. Thus the having contractual terms with the consumer does not exempt a producer from being sued.