Demand and Elasticity on Colgate toothpaste

Demand and Elasticity on Colgate toothpasteName


Course Instructor


I have an elastic demand on Colgate toothpaste. Before changing the price of a particular brand of toothpaste, I will greatly consider the price of other brands of toothpastes in the industry as well as the extent of effect due to anticipated price change. I would therefore ensure that price of my brand is within the industry range and will also let the market mechanisms to dictate my company’s brand prices (Taylor & Weerapana, 2012).

Butter and margarine are the two goods whose cross price elasticity is greater than one because they are substitutes. I will ensure that Butter does not rise in price above margarine at all as a manager. Furthermore, I would slightly decrease the price of butter as a strategy of having a competitive edge against margarine. This will increase the demand for butter while reducing the demand for margarine at the same time because both butter and margarine have positive value for their cross-price elasticity (Taylor & Weerapana, 2012).

A good where my income elasticity of demand is greater than one is an iPhone. If my earnings increase I will go for an iPhone while if my income is low I would not by an iPhone. Definitely, the higher the income the more people will buy iPhones and the lower the income the lower the demand of iPhones (Taylor & Weerapana, 2012). As a manager I would use the information to estimate the effects of changes in economic activity such that during the periods of expansion when the incomes are rising, I will increase the supply of iPhones. I would take into consideration the changes in income while doing business forecasting. It is an important tool for marketing and marketing strategy because people demand iPhones as per the level of their income.


Taylor, J. B., & Weerapana, A. (2012). Principles of microeconomics. Mason, OH: South-Western Cengage Learning.