What determines the magnitude of the price elasticity?
Whether, and how much, newspapers should charge for online content is a contentious question. What role, if any, does the price elasticity of demand for online news content play in this debate?
Your Task: You are free to access the Internet, textbook, and course notes while writing your response. Responses are to be no more than 500 words.
This discussion is setup different than you may be used to. Instead of each student starting their own thread, you will respond and reply within a single thread. The first person to post DOES NOT answer all parts of the question but starts the discussion. Subsequent responders should not repeat answers but should pick up where the conversation left off and build on it. Once the initial question has been addressed, use the below questions for furthering the discussion.
These additional prompts/responses can be used to stimulate discussion:
“If people value journalism, they should pay for it.” What key economic concepts are being considered within that statement?
Why is charging for access sometimes viewed as a high-risk strategy?
What are the advantages and disadvantages of such a strategy?
Which consumers do you think will be most affected by this strategy?
What determines the magnitude of the price elasticity? Do you expect it to be elastic or inelastic?
Individual Comment on Peers’ Responses: Carefully read through your peers’ responses and choose at least 2 to respond to. Please be as specific as possible in your comments. Comments may offer constructive critiques, highlight fellow students’ creativity, point out areas of overlap with other students’ comments or other course themes, build upon fellow students’ insights by adding your interpretation, or ask for clarification.
Availability of substitutes: If there are many substitutes for a product, consumers are more likely to switch to a different product if the price of the original product increases. This makes the demand for the product more elastic.
Necessity or luxury good: If a product is a necessity, consumers are more likely to continue purchasing it even if the price increases. In t
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Time horizon: The elasticity of demand for a product can change over time. In the short term, consumers may not be able to adjust their consumption patterns quickly, making the demand for the product less elastic. In the long term, consumers may be able to find substitutes or adjust their behavior, making the demand for the product more elastic.
Proportion of income spent: If a product represents a large proportion of a consumer’s income, a change in price will have a greater impact on their purchasing power, making the demand for the product more elastic.
Brand loyalty: If consumers are loyal to a particular brand, they may be less sensitive to changes in price, making the demand for the product less elastic.
Overall, the price elasticity of demand is influenced by the factors mentioned above, as well as many others, and can vary depending on the specific product and market conditions.