Inelastic Vs Iced Tea

When it comes to markets, a market will be either elastic or inelastic. Elasticity is a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants. Inelasticity contrasts this concept as people will still purchase a good regardless of price in this market. Iced tea is in an elastic market as the product, iced tea, is not a necessity. Individuals may enjoy the product, although the majority of the population doesn’t enjoy it enough to still purchase it if the price was to be raised. Due to these facts, people will be less likely to purchase the product if the price is raised too high just as how they’d be more likely to purchase the product if the price is lowered. This is the opposite of an inelastic market which involves a product that is a necessity such as gasoline. People need gasoline for their cars in order to get to and from places such as work or …show more content…
Substitutes are two goods for which an increase in the price of one leads to an increase in the demand for the other. Complements contrast this in that they are two goods for which a decrease in the price of one leads to an increase in the demand for the other. An example of a substitute in the iced tea market may be flavored water. If the price of iced tea were to increase a fair amount, people who generally purchase iced tea may start to look for a different beverage that isn’t as costly as the iced tea has become. Flavored water, most likely lemon, plausibly would be the next choice for a consumer as it offers the consumer a more flavorful take on water, thus acting as an alternative for iced tea. An example of a complement would be pretzels. People generally consume a type of snack when drinking iced tea with pretzels being a popular choice. Due to this, if the price of iced tea were to be lowered, the demand for pretzels may increase as the two products go good