Economics: Price Elasticity of Demand

Would you consider the price elasticity of demand for toilet paper to be elastic or inelastic? Why? The demand for toilet paper is inelastic. A product is said to have an inelastic demand when the change in quantity demand due to a price change is small. On the other hand, products whose quantity d emended changes by a bight margin due to a price change are said to have an elastic demand. Toilet paper is an essential product implying that consumers would still purchase it even if there were a price change. Besides, there do not exist alternative predictions for toilet paper, hone consumers must put up with price changes without significant alterations in quantity demanded. This would be the case for other necessities and utilities that do not have close substitutes.

What are some of the non-price determinants (factors) of demand and non-price determinants (factors) of supply for toilet paper?

Other underlying determinants of demand save for price include income, expected changes in price in the future, price of substitutes and c monetary goods, changes in the number of consumers, and changes in the consumers' tastes and preferences.

Regarding income, increasing disposable income would manifest in an increase in the quantity demand of toilet pear when otter factors are held constant. An increase in consumers' disposable income implies an increase in the consumers' ability to pay, which backs up the consumers' willingness to pay. Nevertheless, the change in demand for necessities like toilet paper so less sanative to a change in income, so a change in income would correspond to a relatively small change in the quantity of toilet paper demanded.

Consumers would also demand more toilet paper in the present if they anticipate an increase in price in the near future and vice versa. This is because consumers are rational beings and aim a t maximizing their utility while saving on costs.

The price of complementary goods and substitutes also influences tithe demand for a commodity. An example of a substitute for toilet paper is baby wipes. In this case, the demand for toilet paper will reduce if the price of baby wipes falls and vice versa. This is because some consumers may shift to sue the attentive product, which is cheaper. On the other hand, an increase in the price of a complementary product or a product that must be Sud together with toilet paper would reduce the demand for toilet paper.

The demand for toilet paper may also change d use to changing tastes and preferences. For example, consumers may prefer wet wipes to toilet paper. In such cases, the demand for toilet paper would reduce, even if the price remained constant. The contrary effects of increased demand would be realized if more consumers preferred toilet paper to alternative products.

What are some of the determinants of supply for toilet paper?

The main determinant of the supply of any commodity is price. An increase in price manifests in an increase in quantity demand. This is because suppliers aim to maximize profits at high prices.

This also applies to toilet paper so that more will be supplied in the market at high prices.

Supply of toilet paper will also be after by production costs and conditions. Poor production conditions and high production costs will lead to low output and hence a decline in quantity demand. The quantity supplied is also determined by the produces future expectations of price changes. For instance, when a price increase is anticipated, the suppliers may hoard the product, expecting it to sell at higher prices. The opposite would happen when the quantity supplied increases when lower prices are expected in the future so that the supplies release high quantities to the market in fear of selling at also when prices fall.

The price of the r elate d goods, including cometary and suppletory goods, also influences the supply of a commodity. For example, tissue papers are produced from wood pulp. This implies that if the price of trees goes up, then the supply of toilet paper will decline.

What do you feel were the most impactful contributing factors to the toilet paper shortage of 2020?

The coronavirus pandemic caused a shortage of many products, including toilet paper. His can be integrated from multileg perspectives, including the rise of demand for toilet paper considering during the cooldowns. Households focused on buying a huge stock of toilet paper fields by panic over the lockdowns and hoarding of products. As many factories and stores closed, consumers expected an increasing rise in price. As explained d earlier in the paper, an expectation of an increase in price in the future increases the quantity demanded in the short run. This is because consumers are rational beings and am at maximizing their utility at minimal costs. Hence, consumers bought more, overwhelming the quantity supplied. From the suppliers' perspective, an expectation of an increase in prices as factories and sellers closed down caused hoarding of the prices, hoping to sell at higher prices.