When it comes to digital currencies, what are the two scenarios in which a product is more likely to be price inelastic?

3 answers

• Falke MeyerSep 30, 2021 · 4 years ago
  One scenario in which a product is more likely to be price inelastic in the realm of digital currencies is when it becomes a necessity for daily transactions. As more people rely on digital currencies for their everyday purchases, the demand becomes less sensitive to price changes. This is because consumers are willing to pay the price regardless of fluctuations due to the convenience and benefits offered by digital currencies. Another scenario is when a digital currency gains widespread adoption as a store of value. When a digital currency becomes widely recognized and trusted as a reliable store of wealth, its price elasticity decreases as people hold onto it for long-term investment purposes, regardless of short-term price fluctuations. In both scenarios, the demand for the digital currency becomes less responsive to changes in price, resulting in price inelasticity.
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• ThabisoSep 11, 2020 · 5 years ago
  When it comes to digital currencies, there are two scenarios that can lead to price inelasticity. The first scenario is when a digital currency becomes widely accepted as a means of payment. As more merchants and businesses start accepting the digital currency, consumers are more likely to hold onto it and use it for transactions, regardless of price fluctuations. This creates a situation where the demand for the digital currency is less sensitive to changes in price. The second scenario is when a digital currency gains a reputation as a stable store of value. When people perceive a digital currency as a reliable store of wealth, they are more likely to hold onto it for long-term investment purposes, even if its price fluctuates in the short term. In both scenarios, the demand for the digital currency becomes less elastic, resulting in price inelasticity.
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• Thuesen LockhartMar 04, 2023 · 2 years ago
  When it comes to digital currencies, there are two scenarios that can make a product more likely to be price inelastic. The first scenario is when the digital currency is widely adopted as a medium of exchange. As more people start using the digital currency for everyday transactions, the demand becomes less responsive to price changes. This is because users value the convenience and benefits of using the digital currency, and are willing to pay the price regardless of fluctuations. The second scenario is when the digital currency establishes itself as a store of value. When a digital currency gains trust and recognition as a reliable store of wealth, people are more likely to hold onto it for long-term investment purposes, even if its price fluctuates in the short term. In both scenarios, the demand for the digital currency becomes less elastic, resulting in price inelasticity.
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