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Tesla Microeconomic Analysis (2)

Different types of Teslas have different demands by consumers due to their distinct qualities and prices. For example, a Model 3 Tesla is simpler and cheaper than a Model S Tesla. So, to minimize the amount of other variables that may affect the demand consumers have for Teslas, I will use only Model S cars from the years 2014 through 2016 in my demand curve. (Tesla's Insane Mode of Pricing (NASDAQ:TSLA))

Graphing these points, we have an approximate demand curve that looks like this.

Tesla’s Model S cars are a commodity- an electronic car is not necessary for day to day life, and there are several other brands competing with the company. Therefore, Model S cars have an elastic demand.

From the results above, Model S Teslas are very elastic, as shown by the fact that all of the elasticities for every quarter are greater than one. The elasticities show that the elasticity is greatest from quarter one of 2015 to quarter three of 2015, and least from quarter three of 2015 to quarter one of 2016. This data shows that the demand for Model S cars changes the most when the price of a car fluctuates from around 95,000 to around 100,000, and least when the price is between around 90,000 and around 95,000. In fact, between 90,000 and 95,000, the elasticity of 1.58 is close to unit elasticity, in which a change in price leads to a near identical change in quantity demanded.


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