According to the law of demand, consumers tend to purchase more of a particular product if its price declines and buys less if the price increases. Using price elasticity of demand, it is possible to measure the consumers’ responsiveness toward price changes. The price elasticity of demand varies depending on the type of product. As a result, the price elasticity of some products is relatively high compared to others. In addition, price elasticity is also affected by supply. For example, if suppliers are sensitive to price changes, then the supply is elastic. If they are not responsive to price changes, the supply is inelastic.
The price elasticity of eggs is affected by both the supply and demand. For example, during the summer season, the supply of eggs is high. In addition, the demand for eggs increases as individuals prepare to celebrate Easter by coloring their homes using eggs for their kids to enjoy. The increase in both demand and supply leads to an increment in price. This is illustrated by the outward shift of both demand and supply from D0 to D1 and S0 to S1 respectively. The equilibrium price of the eggs shifts from P0 to P1 leading to a rise in quantity demanded from Q0 to Q1. However, during winter, the supply of eggs declines leading to an increase in the price of eggs. Despite this, the demand for eggs is not affected by a large margin since eggs are considered to be a commodity.
On the other hand, the price of beef is more elastic. This arises from the fact that most individuals consider it to be very convenient for consumption. In addition, beef can be used to make a wide range of dishes. There is also a common belief held that beef contains a high content of vitamins. As a result, it is treated as a necessity. Apart from supply and demand, the price of beef is affected by other factors which include the customers’ preferences, consumers income, and safety. Normally, a change in demand for beef does not result in a price change. In some instances, the price of beef is affected by government intervention.