Supply Demand and Price Elasticity

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Supply, Demand, and Price Elasticity

Supply, Demand, and Price Elasticity

We use multiple products on a daily basis, from toothpaste to ink pens. Though we may use these items for mere moments, there is a different supply and demand cycle for them. Every product has a different supply and demand cycle, and this cycle varies throughout time. Some items may constantly be in demand, like cotton, and others may be in demand seasonally, like eggnog. These shifts in supply and demand may influence the price of certain products, how much of the product is available at any given time, etc. Commodities available during only peak times throughout the year may even be substituted with a similar item. These seasonal items are considered inelastic whereas easily substituted items possess elasticity. Price elasticity of supply is a way to measure the responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the product’s price (Hubbard186). Price elasticity of demand is a way to measure the responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product’s price (Hubbard168). A specific product to study under the conditions of supply, demand, and elasticity is cotton. Cotton is a very versatile resource and its uses vary widely. It is present from bath towels and bed sheets to coffee filters and bookbinding. Cotton is used in crocheting and knitting, and also blended with other fabrics, such as rayon. With so many uses, shifts in the demand for cotton are very subtle. Demand remains at an almost constant high because of the diverse uses among industries. The supply of cotton is at an elevated rate to meet this demand. Recently, the National Cotton Council of America released its top 10 producing countries for 2010. Number one is the...
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