Price – Elastic Products

With the question as stated: When would you want to own a business that sells price-elastic products? I think that any time could be a good time to own a price-elastic business. Obviously, the most opportune time would be when the economy is in the state that it is in today. The best kind of business to be in would be a store like Wal-Mart. Because the fact that Wal-Mart can offer almost countless products for sale, the price point on any one product can cause a great price-elastic scenario on almost all of what they sell.

Because the economy is like it is, you almost can’t get away from shopping there because of all the price-elastic products they offer which is what draws you there in the first place. The only reason you would not want to own a price-elastic business is that you have to sell a lot of products to make up the difference in profit. Most new or existing businesses don’t have the backing or capital to run a true price-elastic business.

As a business owner you may be able to offer some price-elastic products for sale, but need the majority of product for a bigger profit margin. This way, you can get the public in the door. But, in this case, you can’t stay in business for the long term if to many products go out the door at cost. If you can run a business that has a perfectly elastic supply of products, you should be able to sustain your business for the long term. Below is an example of a “Perfectly Elastic Supply Curve”.