They wanted to create inelastic demand so they could keep raising prices.
Companies that cater to children are subject to a more inelastic demand curve than other firms, says LPL Financial chief investment officer Burt White.
But inelastic demand works in both directions on the price curve.
It's inelastic demand, the same as, like, cigarettes, that can go up in price and people keep smoking, because they don't really have much of an alternative.
They face no competition and inelastic demand for their services.
"We are concerned that adding new uses to natural gas, such as in transportation, will create new and relatively inelastic demand that we cannot meet without high prices, " he warned.
Many industries also enjoy a higher degree of visibility than the broader economy, such as healthcare where innovative products and inelastic demand can create monopolistic market positions which persist for a decade or more.
FORBES: Value Investing Getting Too Crowded? Another Golden Age Of Growth Investing Is On The Way
While the risk of stagflation is still a long-term phenomenon, inelastic demand curves for food and energy products could force market participants to feel the sting of rising headline inflation and thus cut back to minimum spending.
FORBES: PPI Surges: Food Rises Most Since '74 As Fuel Gains 3.7% In A Month
No matter how inelastic the demand for any commodity, be it gasoline or tobacco, there are price points where usage declines fairly rapidly.
As we discussed in the earlier article, Starbucks primarily serves a demographic from which demand is relatively price inelastic, meaning that changes in price does not impact demand.
FORBES: Higher Coffee Prices No Curse For Starbucks But The Stock Is Overvalued Above $30
The fundamental point is that, in the presence of inelastic supply curves, demand-side subsidies face a headwind of adverse price effects, while direct public provision gets a tail wind of favorable price effects.
In their second report they both point to the inelastic nature of supply and demand for food and also claim that food prices move much more than supply and or demand for food.
FORBES: Commodity Speculation Kills People: So Says the World Development Movement
In other words, if the price of Chinese goods to American consumers increased by 21 percent (on average) and Americans reduced their consumption of Chinese goods by less than 21 percent, then demand would be considered inelastic, the price effect would dominate, and total import value would rise (adding to the trade deficit).
FORBES: Economists Ignore the Facts in Supporting Chinese Currency Legislation
The term inelastic simply refers to a good whose demand is relatively unresponsive to a change in price.
Cigarette consumption can be expected to fall as prices rise, but revenues still increase because demand for cigarettes is relatively inelastic.
In the short term supply and demand for food are highly inelastic.
FORBES: Commodity Speculation Kills People: So Says the World Development Movement
Starbucks targets a more affluent demographic of coffee drinkers that typically exhibit strong brand loyalty, making demand for its coffee more inelastic with respect to price fluctuations.
The total amount of coal sold to utility customers was not significantly impacted during the economic downturn as utility coal is used in power plants for generating electricity, the demand for which is largely inelastic.
FORBES: Massey Digs Deeper For More Coal, Stock's No Diamond
In my paper, I went on to examine whether the increase in imports was attributable to American demand for Chinese goods being price inelastic.
FORBES: Economists Ignore the Facts in Supporting Chinese Currency Legislation
There are plenty of reasons that American demand for Chinese goods is price inelastic including, most importantly, that there are limited substitutes for those goods.
FORBES: Economists Ignore the Facts in Supporting Chinese Currency Legislation
The primary advantage to owning health care properties is that they tend to be recession resistant in that demand for health services is relatively inelastic.
The problem with the natural gas market is that it is highly inelastic and is subject to massive swings in demand with the degree heating and degree cooling days on a region or even continent.
The reason that real estate prices in San Francisco respond so vigorously to relatively minor changes in demand is because the supply is so inelastic.
Pharmaceuticals are a traditional favorite, partly because the demand for them is thought to be relatively inelastic.
应用推荐