Price Elasticity And Price Elasticity Of Supply And Market Prices

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According to the book Economic Logic (2014), monopoly power refers to the ability of an individual or firm to manage and maintain the market price of goods or services above the level that would prevail under competition. Therefore, it would appear that if two rival companies decided to merge, most of the competition would most likely be eradicated (Skousen, 2014). By eliminating or minimizing the competition, the merged companies would become more prominent than the rest of the market. For this reason, it would be practically impossible for either business to avoid or deny an increase in market power over a period of time.
Nevertheless, the merged organizations can develop a new product or provide a new service, in order to avoid a rise in
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Price inelastic, on the other hand, indicates that changes in the price, will have little to no influence in the quantity of demand. In other words, a price rise would always cause an increase in revenue, for the reason that demand would remain constant (Skousen, 2014). Both elasticity and price inelastic are significant aspects of supply and demand. Especially, since the use of these systems can assist in identifying if the market prices are at equilibrium, or whether a surplus or shortage is being …show more content…
Primarily, due to the fact that, if the demand for a good or service is considered inelastic, then the percentage in demand would be less than the percentage change in price, usually, due to the inability of the demand to alter regardless of the price adjustment.
Changes in the price of plastic surgery do not affect the number of operations. (TRUE) When referring to this distinct situation, the theory that changes in the price of plastic surgery do not impact the number of operations, is true. For the reason that, the demand for plastic surgery is price inelastic. Therefore, a change in price would not affect the quantity demanded by consumers.
Quantity demanded is quite responsive to changes in price. (FALSE) When taking into account the concept that the demand for plastic surgery is price inelastic, then the idea that quantity demanded is quite responsive to changes in price, is false. Mainly, since this idea is deemed price elastic, which states that a change in price affects the quantity being requested; rather than the reality of this case, which is that the demand is price inelastic and not influenced by the price

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