elasticity of luxury cars
...compared to other countries as consumers will have to buy a car despite the price increase. Also, if the time period of the price increase is short, the price elasticity demand of car maybe inelastic too, as the longer the time period, the more elastic the good is. However, these only apply to the price elasticity of demand for cars in general. Jaguar cars are counted as luxury goods. Normally, as the price of luxury goods increases, buyers would switch to inferior goods. For example, when the price of jaguar car rises, car buyers would switch to inferior goods such as Toyota. Moreover, there are still many close substitutes available which are luxury goods, such as Mercedes Benz and BMW cars where their prices remain. These will cause the price elasticity of demand for jaguar cars to be elastic. The income percentage will also affect the elasticity of jaguar cars. As a person’s income decreases, he would find Jaguar cars too expensive and seek cheaper alternatives. Another possibility might be the concept of diminishing marginal utility. When a person buys a jaguar car, it provides them with great satisfaction, however, the more the person buys, he will receive less utili...