Writing Homework Help

Discuss the ways in which the concept of elasticity informs strategic choices.

reply one

Discuss how the concept of elasticity informs strategic choices. I would love to say I understand what elasticity is about, but I am not sure I will appreciate it. I asked my brilliant daughter if she could help me understand this, and she started talking about what happened recently with Game Stop stock and Robinhood stocks. I still do not understand that, but I will attempt to make sense of this.

In search of 20 articles, four consider that income drives healthcare expenditures (Martin, 2011). The more income people make, the more healthcare they are willing to pay for. It may be easier for someone who makes a higher income to pay for more preventive care than someone that makes less money. Preventing illnesses can save money by preventing chronic diseases like obesity (Wang, 2018). So, if I am looking at this right, the more money one makes, the more willing they are to pay for preventive measures to keep from getting sick. However, if the price of these things rises, then even though I make more money than others, I may again re-think how I spend my money.

If I get a raise that amounts to 2% of my income, but the prices of things I need increase by 4%, I am not better off than before; I am worse off, which means inelastic. But if my income goes up and the price of things I need does not grow at the same rate, then it means it is elastic (Lee, 2019). So I may not get an elective procedure until I feel like it will be an excellent value for healthcare. If I have my deductible paid for the year, the value of that surgery would be worth it for me because there would be less out-of-pocket money for me. Boy, do I wish I knew if I understood this correctly. But if I must pay the deductible and any co-pays required, then the value to me with not be elastic and therefore inelastic.

The cross-price elasticity of demand could be that I prefer to take the lower-priced generic drug than a higher-priced name brand. Both drugs work the same way and have the same effect for whatever reason I am taking it. But one costs less, and so I prefer to save money and buy it. If my income were higher, maybe I would not let the price make a difference in my choice. I may choose the brand that I trust most, although the price is more. Let us hope I am getting this now.

Now I must see what price elasticities of demand all is about. When the price of something goes up, there is a chance that the need for that product will go down. Especially if there are cheaper products available, if I have two brands of the same product and one is on sale, I will most certainly purchase the cheaper one. After all, there is no difference other than price. That would make the demand for one go up, and the other goes down. Or are we back to cross-price elasticity again.

I see healthcare as being more inelastic than elastic. For the most part, when we need healthcare, we will have to find a way to pay for it. We do not have much choice other than to stay healthy and keep our cost of healthcare low. Chronic illnesses cost more to be cured than they do to be prevented.

2 Timothy 2:7, “ Reflect on what I am saying, for the Lord will give you insight into all this” (Life Application Study Bible, 2013). Last night I went to bed not even remotely understanding what all of this meant. Prayers led me to what I have written on this paper. If I am still not understanding, then I see this as God leading me to more study. I know that more than one of you will be able to help me understand this more clearly. 

reply two

Pricing is crucial in every organization or company when planning to achieve profit. In other words, the company’s main objective should be to price their goods and services depending on the level of value perceived by the consumer. Pricing can be seen as a tool to help the company in recovering costs which the company has incurred for making their products. It also helps the company in earning profits which can further be use to expand the capacity of the company. Pricing has been noticed to be much more critical than merely determining the value of a product or services. Understanding the demand and the elasticity within a given market, it helps to project where a company should be positioning itself in the future.

Elasticity is a very important concept in economics. It is used to describe or measure how responsive demand can be in response to changes in price. Elasticities are valuable tools for managers and measures the association between the quantity demanded and related factors (Lee, 2019). Elasticity aims to reduce the confusion in describing changes, and it allows for faster and better understanding when making statistical choices. Managers use elasticity when composing their strategic goals and anticipate how the market would react in different situations. Price elasticity of demand is a measure of the sensitivity of demand to changes in price, and this measures the percent change in quantity demanded associated with a one percent change in price (Corrigan et al., 2020).

Elasticity is about sensitiveness or responsiveness of demand to the change in price. The price elasticity of demand is even more useful, because prices depend on choices managers make and every estimates of the price elasticity of demand will guide pricing and contracting decisions (Lee, 2019). Elasticity of demand could be calculated in three different ways such as income elasticity, price elasticity, and cross-price elasticity. Each of these elasticity changes, measures different aspect within economics, consumer income, product price, and price of a substitute which allow economist to understand better how the changes in each level will impact the overall stability of the organization. Out of these three price elasticities, price elasticity is considered the most common and essential as it influences not only the price but the contracting decision-making process. Health care demand is considered to be reasonably inelastic. Inelastic demand does not mean that consumption will be unaffected by price changes (Lee, 2019).

Elasticity can inform strategic choices in different ways and one of such ways is through income elasticity. The estimated income elasticity of demand is often used to predict future changes in consumption in response to changes in income (Ghoddusi et al., 2020). It is important for health care managers to have an understanding of the consumers who will be utilizing their organization for their health care needs. For example, when a consumer income elasticity is high, they will be less sensitive to price changes, while consumers with low-income usually cut back on luxury items.

Another way that elasticity can inform strategic choices is through price elasticity. For example, price is an important factor especially for low-income households who are more conscious of value and price than higher income households. Since price is more important for low-income earners or consumers, it is recommended that business managers focus mainly on the needs and preferences of their consumers and can also incorporate pricing strategies such as the buy one and receive two strategy.

Romans 12:2 (New International Version) reads “Do not conform to the pattern of this world, but be transformed by the renewing of your mind. Then you will be able to test and approve what God’s will is , his good, pleasing and perfect will”. Just as price is important in determining what to get, so to God should be an important part of our lives. If we make God an important part of our lives, then we all shall enjoy his good, pleasing, and perfect will.