Example the price of computers 2 supply and demand

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Example: the price of computers
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2. Supply and Demand With most products: Demand increases with lower prices Demand decreases with higher prices This does not apply to some products Demand Elasticity The degree to which demand for a product is affected by its price Products have either elastic or inelastic demand
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Elastic Demand When a change in price creates a change in demand. Example: Price of Vegetables Law of Diminishing Marginal Utility Consumers will only buy so much of a product even if the price is low. Example: Price of Laundry Detergent
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Inelastic Demand When a change in price has very little effect on demand for a product Example: Milk Bread
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Demand Elasticity The demand elasticity depends on five factors: Brand Loyalty Availability of Substitutes Price Relative to Income Luxury vs. Necessity Urgency of Purchase .
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Brand Loyalty When a customer will not buy a substitute product over a brand name of their choice.
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