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Price Elasticity for Goods

Please explain whether the following goods or services are price elastic or inelastic in both the short run and long run.

a. Gasoline
b. Texaco gasoline
c. Salt
d. Large screen TV
e. Cosmetic surgery
f. Lasik eye surgery
g. A product or service from your organization

Solution Preview

A - Gasoline
<br>In the short run this is an inelastic product. When you pull up to the service station you fill up the tank whether gas costs $1.00 or $1.50 since you need to drive your car to work, run errands, etc. As a result you need to buy gas independently of the price.
<br>In the long run this is an elastic product. You can decide to use your car less (buy a bicycle or walk more) and your gasoline consumption will thus become more flexible and dependent on the price.
<br>B - Texaco gasoline
<br>In the short run this is an elastic product. If you need to fill up your car and you come to an intersection with two gas stations (for example Texaco and Shell) you will go to ...

Solution Summary

This solution analyzed the price elasticity (short and long run) for several goods.