Elastic and Inelastic Demand
Source Brad Grissom
Date 01/03/03/18:56

I am taking a class at CSM in their liberal arts department and we are talking about alternative energy sources as well as the energy "problem" in California. One of my team's main arguments is that so long as companies are allowed to act freely without too many restrictions (laws and regulations), a natural solution will occur. This is because energy and electricity is in high demand in California and represents a profitable opportunity for companies.

This economic incentive will motivate people and corporations to provide solutions. Extra motivation comes from the fact that energy is an inelastic good. People will virtually pay any price for energy; it is something they need. Therefore in a scarcity situation, people will pay high prices for electricity. The issue of elastic and inelastic deman will be covered in our presentation (Group 2) today.


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