Price Elasticity

Price Elasticity
Student’s Name
Institution of Affiliation
Price Elasticity
Question 1
The continued consumption of tobacco has been linked to the manifestation of respiratory complication where the extremities lead to death. For beginners, the demand for cigarettes is higher following the recurrent characteristics of tobacco consumption among the youth. The government may decide to implement taxation as part of the public policy to safeguard the health of the teenagers. However, in the short term taxes will be insignificant into the quantity demanded because of the low PED. In the long run, the change will price will have already taken a toll on the amount of money spent consuming tobacco leading to a reduction in quantity utilized by the consumers (Saffer, & Chaloupka, 2000). Therefore taxation will have a positive effect and will be influential in averting the trend of smoking cigarettes among the youth only after the addicts have adjusted to the price change.
Question 2
In such a scenario, there is the presence of close substitutes to the whitening services given to the dentists. For instance, there are kinds of toothpaste in the market that offer whitening options for consumers as well as overall dental care. The demand for the services of the doctor when it comes to whitening is highly elastic because of the presence of substitutes in the market. Therefore, the PED is high, and the buyers will opt to shift to the next best commodity.
Question 3
From the entrepreneur’s point of view, the demand for commodities amounts to increased revenue and excellent profit margins.

Price is an issue when it comes to the consumer behavior and the ultimate choice to purchase the product (Bijmolt, Heerde, & Pieters, 2005). The business is forced to adopt a pricing strategy that will accommodate all the different incomes level s of the society. This will ensure that the elasticity is low by sticking with the middle-of-the-road pricing technique.
References
Bijmolt, T. H., Heerde, H. J. V., & Pieters, R. G. (2005). New empirical generalizations on the determinants of price elasticity. Journal of marketing research, 42(2), 141-156.
Saffer, H., & Chaloupka, F. (2000). The effect of tobacco advertising bans on tobacco consumption. Journal of health economics, 19(6), 1117-1137.