HOW DO YOU RESPOND TO PRICE CHANGES?

Price elasticity of demand refers to how responsive people will be to the quantity of products and services that they demand as the price changes. It asks the question: To what extent do price changes affect people's consumption patterns? Everyone's responses will vary based on several factors, including the price of a product, an individual's income, the percentage of income spent on a product, how critical an individual perceives the product or service to be, and more. For example, how many consumers would continue to include the same amount of soft drinks on their grocery list if the prices doubled within the year? Do you think many people would drink less due to how much the costs increased, or would that not be enough of a change to affect consumers' buying behaviors? What if the prices increased tenfold over the next 3 months? It would be difficult to imagine that people would continue to buy soft drinks by the case. Perhaps, they may choose to get one can at a time and save it for a special occasion instead.

here you will examine your purchases of a product or service and consider the extent to which price changes have a minor or significant effect on the quantity you purchase.

Reflect on your past purchases and select one where the product or service experienced a change in price, either up or down. You could choose, for example, gasoline, takeout food, smartphones, clothing, movies, or another product or service. How did you respond to the price change? What factors influenced your decision? Was the price change only for the brand of the product you purchased or for all brands of the product? Were you able to find alternatives or close substitutes? Did your decision affect the purchases of other products and services

give explanation of the factors that influence your decision about how much of your selected product or service to purchase. In your explanation, address the following:

• What might happen if the price of that product or service fell or rose?
• Identify complements to and substitutes for the product or service you identified. How do these other products or services influence your purchasing decisions?
• To support your response, be sure to reference at least one properly cited scholarly source.