Assume that you recently made a purchase on Amazon.com. The next time you go to purchase this item, let’s say you find out that the price has increased by X dollars. How would you respond to this price increase? Would you say this item is Relatively Elastic, Relatively Inelastic, or Unitary Elastic? Explain using the Determinants of the Price Elasticity of Demand (see page 83). Think about how the increasing popularity of shopping online impacts your response.

A: I recently purchased supplies for my job, and I only purchased these items because of the prices that were offered and speed of delivery. The items I purchased are elastic and can be substituted, were complementary toward the first good purchased. I would almost guarantee that 90% of Amazon items are elastic. Only because people purchase from Amazon due to price shopping, whether it is savings on shipping, savings on speed of delivery, saving on gas to purchase online, savings on time spent shopping and more. We would want to think people online are comparing prices to other online retailers and if the same item is sold at a different online retailer they would make a wise choice to purchase that item there. I believe online shopping has become a shopping choice due to easier shopping, and comparing prices to get the best deal. So, if I shop online and it’s so easy to compare prices, and I noticed the price increased I would look into a substitution. Most items are in multiple brands, colors, etc. that would help customers have more choices. More choice the more elastic. Items such as gas, water or medicine are more inelastic. These necessities are important to the consumer that if the price went up, we will still consume it. I do agree that income does make a difference, because someone who wants to spend high dollar on an item they can get cheaper or substitute makes that item less elastic. So there are multiple determinants that can affect the elasticity.