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Free Example of Elasticity Essay

The statement about inelastic demand is a very pertinent account, and it happens to be quite obvious as well. Inelastic demand would mean that prices and demand for a particular commodity would be directly proportional to each other. They would be inversely proportional in case of elastic demand.

The Prime example of such commodities would be gold, especially in India today. It has hit an all time high, but consumers are bent on buying more and more of gold. They are seen investing in various gold schemes as well. Fair amount of surcharge in the form of tax is necessary here as only the higher income group gets affected.

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The share market also faces similar trend of inelastic demand. When prices of shares for certain companies go up, brokers dive into purchasing more of the same in speculation of further rise in prices. This results in great demand. Such transactions should be heavily taxed in order to avoid these malpractices. Also, some vendors hoard certain perishable items like potatoes and onions in order to hike up the demand as well as the prices.

The above scenario paints a dull picture of the economy; as a result, the government should tax such items in order to make it fair to all. This would also ensure that hoarding of essential items is brought under control.

The Government should pull up their socks and tax for sure; however, it should tax hard where there are enough cushions to absorb the impact. The middle class continues to bear the maximum brunt of taxation; thus, the corporate sector, especially the men folk, has to pay too high taxes. Thus, it has become very difficult for them to make ends meet. So, the rationale here is clear.

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