Results 1 to 6 of 6

Thread: Price Elasticity

  1. #1

    Price Elasticity


    Currently studying an A Level in Economics and I have now come across the wonderful concept of Elasticity and all its different variations.

    Could someone please explain to me why a Rolex Watch is classed as Price Elastic?

    My initial thought is that a Rolex Watch is Price Inelastic, this is a niche product aimed at the rich. If the price goes up, for example by 10%. Will this put off a buyer? People buying a Rolex Watch would probably not care about a price change, hence my initial thought of it being price Inelastic.

    But apparently I am wrong...

  2. #2
    But said "rich" person doesn't have to buy that brand of watch as there are lots of other premium watch brands, and they can also both delay the purchase and/or chose a cheaper model of the same brand.

    Homework: Research Giffen goods versus Veblen goods, and also read "The millionaire next door" to realise that rich people may not always be what they seem.

  3. #3
    So basically, a Rolex watch is price elastic, because of the fact there are other brands of premium watches?

  4. #4
    > So basically, a Rolex watch is price elastic, because of the fact there are other brands of premium watches?

    I'd argue that that's a big part of the argument, yet others would disagree.

    If you want straight answers then go for hard science subjects rather than soft ones. Economics seems to have little predictive power so I mostly ignore it.

  5. #5
    I'm with you on this.

    My interpretation of demand for Rolex watches would be that they are relatively price inelastic.

    I would like to read the view that you are receiving saying that Rolex would be price elastic.

    goods of ostentation are usually relatively inelastic.

    I have to declare that I hold a degree in Economics.

    I hope this helps...... stick to your guns unless the other person can give you a well thought out argument.

  6. #6
    I have thought further and I would definitely categorise Rolex product as a "VEBLEN" good

    A product of conspicuous consumption or status.

    In this situation Inelasticity of demand would be the correct interpretation.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts