Comments on: The role of advertising in determining price elasticity of demand http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/ for students and teachers of AP and IB Economics Mon, 15 Mar 2010 06:58:04 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Jon http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-9029 Jon Tue, 17 Nov 2009 19:34:10 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-9029 If advertising is so effective in enticing the consumer or reducing the price elasticity, then why is it counter-cyclical? That is, why do producers in the aggregate reduce advertising during recessions and other economic downturns? If advertising is so effective in enticing the consumer or reducing the price elasticity, then why is it counter-cyclical? That is, why do producers in the aggregate reduce advertising during recessions and other economic downturns?

]]> By: Sophie http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8923 Sophie Thu, 05 Nov 2009 21:05:09 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8923 Evidently through advertising many people are influenced on not only what they should be spending their money on, but also how much of their money they should be spending on it. The company can reduce its consumers' response to a change of price of their beer by convincing them that their beer is not only the best beer in the world, but that even if you dont normally drink beer, you should for sure start to do so now. Furthermore, since beer is a 'cheap' product, meaning that it does not take up very much of a consumer's income, then it is not a very big deal for a consumer to buy a can of beer as opposed to a new car. What the advertising campaign has done here is make the beer seem very tempting for people to buy, and therefore, people are stupid enough to believe things such as advertisements and go ahead and purchase the good. A firm is interested in keeping the price elasticity of demand of their product low, meaning that they want to keep it inelastic, because that way they know that if the price of their beer were to increase or decrease, they would not lose too many of their costumers. Furthermore, if the company were to be taxed by the government, then they also know that they can lay off most of their tax burden on the consumers because they will still be willing to purchase the product. Evidently through advertising many people are influenced on not only what they should be spending their money on, but also how much of their money they should be spending on it. The company can reduce its consumers’ response to a change of price of their beer by convincing them that their beer is not only the best beer in the world, but that even if you dont normally drink beer, you should for sure start to do so now. Furthermore, since beer is a ‘cheap’ product, meaning that it does not take up very much of a consumer’s income, then it is not a very big deal for a consumer to buy a can of beer as opposed to a new car. What the advertising campaign has done here is make the beer seem very tempting for people to buy, and therefore, people are stupid enough to believe things such as advertisements and go ahead and purchase the good.
A firm is interested in keeping the price elasticity of demand of their product low, meaning that they want to keep it inelastic, because that way they know that if the price of their beer were to increase or decrease, they would not lose too many of their costumers. Furthermore, if the company were to be taxed by the government, then they also know that they can lay off most of their tax burden on the consumers because they will still be willing to purchase the product.

]]> By: Grace Forsyth http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8898 Grace Forsyth Tue, 03 Nov 2009 20:19:43 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8898 Advertising is an important thing for producers; an effective advertisement campaign can bring the company more consumers than before. An advertising campaign could make the difference between someone buying that product or a substitute for that product. This advertisement was very influential on the consumers and the advertisement made Milson Beer seem unique and different to its substitutes. It is a very patriotic advert and makes it seem as if buying this product would be supporting Canada and almost makes it seem like a necessity that comes with being Canadian. This causes more consumers to be less responsive to a change in the price due to the fewer substitutes. It is in the interest for a firm like Molson to decrease their price elasticity of demand as it will enable them to charge the consumer more for the product. Even though there would be an initial high cost in order to produce the advertisement it reduces the number of substitutes for the product and creates a less elastic product. If the product is less elastic it means that Molson would be able to increase the price of the beer and increase their total revenue; this however can only work if there is still a relatively high demand for the product even at the new raised price. In order to achieve this they have to make sure the quantity demanded does not deacrease my more than the price was increased by. In this case Molson managed to increase its share in the beer market by 3% which was taken almost directly away from a rival company (substitute), Labatt, that lost 3%. Advertising is an important thing for producers; an effective advertisement campaign can bring the company more consumers than before. An advertising campaign could make the difference between someone buying that product or a substitute for that product. This advertisement was very influential on the consumers and the advertisement made Milson Beer seem unique and different to its substitutes. It is a very patriotic advert and makes it seem as if buying this product would be supporting Canada and almost makes it seem like a necessity that comes with being Canadian. This causes more consumers to be less responsive to a change in the price due to the fewer substitutes.

It is in the interest for a firm like Molson to decrease their price elasticity of demand as it will enable them to charge the consumer more for the product. Even though there would be an initial high cost in order to produce the advertisement it reduces the number of substitutes for the product and creates a less elastic product. If the product is less elastic it means that Molson would be able to increase the price of the beer and increase their total revenue; this however can only work if there is still a relatively high demand for the product even at the new raised price. In order to achieve this they have to make sure the quantity demanded does not deacrease my more than the price was increased by. In this case Molson managed to increase its share in the beer market by 3% which was taken almost directly away from a rival company (substitute), Labatt, that lost 3%.

]]> By: Nora http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8865 Nora Sat, 31 Oct 2009 08:50:17 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8865 The elasticity of demand for Molson beer is affected by one of the determinants of demand. With this influential advertisement, the Molson Company reduced the number of substitutes, by making their product unique and to some extent non-interchangeable. For consumers, the Molson beer is now attached to national pride and to a differentiation from the USA. Labatt beer, which before this commercial was probably in perfect competition to Molson’s, no longer sells the same product to consumers as this idea of nationalism is not tied to it. This is why consumers prefer to buy Molson’s beer and, due to fewer substitutes, are less responsive to a change in price. It is in Molson’s interest to decrease the price elasticity of demand because this means that consumers are less responsive to a change in price of the beer. This means that Molson can increase the price without the quantity demanded decreasing by much. Probably in the case of Molson’s beer, the company can increase the price and the quantity demanded will decrease by a smaller proportion than the price increase (PED of the beer is inelastic) and so Molson makes more revenue. The elasticity of demand for Molson beer is affected by one of the determinants of demand. With this influential advertisement, the Molson Company reduced the number of substitutes, by making their product unique and to some extent non-interchangeable. For consumers, the Molson beer is now attached to national pride and to a differentiation from the USA. Labatt beer, which before this commercial was probably in perfect competition to Molson’s, no longer sells the same product to consumers as this idea of nationalism is not tied to it. This is why consumers prefer to buy Molson’s beer and, due to fewer substitutes, are less responsive to a change in price.

It is in Molson’s interest to decrease the price elasticity of demand because this means that consumers are less responsive to a change in price of the beer. This means that Molson can increase the price without the quantity demanded decreasing by much. Probably in the case of Molson’s beer, the company can increase the price and the quantity demanded will decrease by a smaller proportion than the price increase (PED of the beer is inelastic) and so Molson makes more revenue.

]]> By: Vic Chen http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8834 Vic Chen Wed, 28 Oct 2009 16:15:32 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8834 The purpose of a commercial is to make more profits from the product that is being advertised. In order to let the product succeed in the market through a commercial, it is necessary that it attracts the customers. If you raise the price of a product without advertising it, there are so many substitutes out there in the market, allowing the customers switching to a substitute at a competitive price. However, if the commercial succeeds, it increases the demand of the product, and consequently, the quantity supplied will increase as well. Moreover, sometimes the increase in price of the product is negligible when the commercial succeeds, that is, when they change their price, the customers would still buy the product. The purpose of a commercial is to make more profits from the product that is being advertised. In order to let the product succeed in the market through a commercial, it is necessary that it attracts the customers. If you raise the price of a product without advertising it, there are so many substitutes out there in the market, allowing the customers switching to a substitute at a competitive price. However, if the commercial succeeds, it increases the demand of the product, and consequently, the quantity supplied will increase as well. Moreover, sometimes the increase in price of the product is negligible when the commercial succeeds, that is, when they change their price, the customers would still buy the product.

]]> By: Oh Sang hoon http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8830 Oh Sang hoon Wed, 28 Oct 2009 14:17:30 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8830 Advertising is important thing to promote their products interesting. And advertisers have to make them special to attract the consumers. Also, advertising leads consumers to buy products. So, popularity of the products (QD) would increase and quantity supplied would increase as well. And by creating this advertisement, Molson increased their costs successfully and they would get more profits. As the Molson beer becomes inelastic, consumers will be less responsive to change in price. For example, if the price of this product increases, amount of quantity demanded would be similar. Consequently, Molson is able to sell their products to same amount of beer with higher prices which leads to profits. Advertising is important thing to promote their products interesting. And advertisers have to make them special to attract the consumers. Also, advertising leads consumers to buy products. So, popularity of the products (QD) would increase and quantity supplied would increase as well.
And by creating this advertisement, Molson increased their costs successfully and they would get more profits. As the Molson beer becomes inelastic, consumers will be less responsive to change in price. For example, if the price of this product increases, amount of quantity demanded would be similar. Consequently, Molson is able to sell their products to same amount of beer with higher prices which leads to profits.

]]> By: Hang Bai http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8823 Hang Bai Wed, 28 Oct 2009 12:21:28 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8823 Although money spent on advertising could cost a lot, the firms would like to do advertising for their products. The reason for this is that advertising, especially a successful one can be seen as a powerful tool used to influence customers to purchase or to attract the potential customers to purchase their products instead of the substitute products. As a result, the firm would able to maximize the profit which is their interest. In this case, I had to say this advertising is successful. Firstly, it is patriotic and with a sense of humor, so it is able to attract customers pay an attention on it. Secondly, it conveys to the consumers that their product is better than other substitute products, so customers willing to purchase this product rather than others, and the QD of Molson Canadian beer will be increased. Therefore, Substitutes are the factors that affect the price elasticity of demand for a product. Consequently, it decreased the price elasticity of demand for Molson Canadian beer, which means reduce customers’ responsiveness to change in price of a good like Molson beer. Although money spent on advertising could cost a lot, the firms would like to do advertising for their products. The reason for this is that advertising, especially a successful one can be seen as a powerful tool used to influence customers to purchase or to attract the potential customers to purchase their products instead of the substitute products. As a result, the firm would able to maximize the profit which is their interest. In this case, I had to say this advertising is successful. Firstly, it is patriotic and with a sense of humor, so it is able to attract customers pay an attention on it. Secondly, it conveys to the consumers that their product is better than other substitute products, so customers willing to purchase this product rather than others, and the QD of Molson Canadian beer will be increased. Therefore, Substitutes are the factors that affect the price elasticity of demand for a product. Consequently, it decreased the price elasticity of demand for Molson Canadian beer, which means reduce customers’ responsiveness to change in price of a good like Molson beer.

]]> By: Asuka http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8822 Asuka Wed, 28 Oct 2009 12:14:25 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8822 Most of the time advertising campaigns fail to impress consumers as it is difficult to fulfill everyone's wants when there are different people with individual lifestyles or tastes. Furthermore products such as beer are likely to have many competitors, which in this case is Labatt. This is known as a substitute and it tends to make the product elastic. This is because consumers can easily switch to another brand or substitute when a certain product's price goes up and so increases consumers' responsiveness. Therefore it is a huge accomplishment for a firm like Molson beer to have a successful advert as it means that it stands out more than its substitutes and its use of a patriotic theme makes it more unique. Successful means effective and so this indicates that the advert had created a lot of loyal consumers who are less responsive to changes in price of Molson beer. Decreasing the price elasticity of demand for a product means that the product will be able to stay stable in the competitive market despite the changes to its price. Firms like Molson would prefer this kind of situation because it will ensure a firm position in the market and it is an advantage to the long run operation of the business. Most of the time advertising campaigns fail to impress consumers as it is difficult to fulfill everyone’s wants when there are different people with individual lifestyles or tastes. Furthermore products such as beer are likely to have many competitors, which in this case is Labatt. This is known as a substitute and it tends to make the product elastic. This is because consumers can easily switch to another brand or substitute when a certain product’s price goes up and so increases consumers’ responsiveness. Therefore it is a huge accomplishment for a firm like Molson beer to have a successful advert as it means that it stands out more than its substitutes and its use of a patriotic theme makes it more unique. Successful means effective and so this indicates that the advert had created a lot of loyal consumers who are less responsive to changes in price of Molson beer.

Decreasing the price elasticity of demand for a product means that the product will be able to stay stable in the competitive market despite the changes to its price. Firms like Molson would prefer this kind of situation because it will ensure a firm position in the market and it is an advantage to the long run operation of the business.

]]> By: Einar L http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8821 Einar L Wed, 28 Oct 2009 11:06:02 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8821 If you increase the price of a product like beer were there are so many substitutes, people would simply buy beer from another company. If one product is advertised in a way so that it distinguish it self from other products in a positive way, then the quantity demanded would increase. Soon people would become loyal to this brand of beer and would care little if the price increased 10%. The product is now more inelastic since the quantity demanded would change little if there was a price change. If you increase the price of a product like beer were there are so many substitutes, people would simply buy beer from another company. If one product is advertised in a way so that it distinguish it self from other products in a positive way, then the quantity demanded would increase. Soon people would become loyal to this brand of beer and would care little if the price increased 10%. The product is now more inelastic since the quantity demanded would change little if there was a price change.

]]> By: Elvira http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8815 Elvira Wed, 28 Oct 2009 09:25:58 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8815 It is obvious that when a product was successfully advertised, consumers will take interest in it rather than other substitute products. In the case of Molson beer, the advertisement inspired an increase of patriotic zeal of Canadian. The spokesman, Joe, exclaimed his name was Joe, he was an Canadian at the end of the advertisement. He also said Canada believes in peace not in policing, which obviously struck a chord with his audiences. It probably made consumer to buy goods and show willingness. Thus, even though the price of Molson beer increases, the quantity demanded will be less responsive to the change in price. The interest of a firm such as Molson is to make more profits. By decreasing the price elasticity of its products, there were not so many products left. People were willing and showed their interest to buy it. So Molson still can get high revenue. It is obvious that when a product was successfully advertised, consumers will take interest in it rather than other substitute products. In the case of Molson beer, the advertisement inspired an increase of patriotic zeal of Canadian. The spokesman, Joe, exclaimed his name was Joe, he was an Canadian at the end of the advertisement. He also said Canada believes in peace not in policing, which obviously struck a chord with his audiences. It probably made consumer to buy goods and show willingness. Thus, even though the price of Molson beer increases, the quantity demanded will be less responsive to the change in price.
The interest of a firm such as Molson is to make more profits. By decreasing the price elasticity of its products, there were not so many products left. People were willing and showed their interest to buy it. So Molson still can get high revenue.

]]> By: Jacob Edwards http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8811 Jacob Edwards Wed, 28 Oct 2009 06:58:00 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8811 As soon as a product is commercialized at a large scale (nation wide), it's required that it attracts customers, in order to succeed in the market. It can attract customers thanks to it's quality or maybe by the way it's commercialized. And when the commercialization succeeds, it can increase the quantity demanded for it, so consequently it will increase it's quantity supplied. And when something is as successful as this, consumers will buy it and be more careless about it's price. So if the price for Molson's beer increases went from $2 to $2.50 people will still buy in quite a high amount. But if it had not been advertised, and it's price would have increased the same way, customers would switch to a substitute. So thanks to the success of the commercial, the Molson beer company have increased their popularity and fidelity with their customers. And thanks to that new born link they have made their product more inelastic. Which means that they made their product feel like a necessity to their consumers and, if they change their price, the consumers would still purchase the product in a similar amount. As soon as a product is commercialized at a large scale (nation wide), it’s required that it attracts customers, in order to succeed in the market. It can attract customers thanks to it’s quality or maybe by the way it’s commercialized. And when the commercialization succeeds, it can increase the quantity demanded for it, so consequently it will increase it’s quantity supplied. And when something is as successful as this, consumers will buy it and be more careless about it’s price. So if the price for Molson’s beer increases went from $2 to $2.50 people will still buy in quite a high amount. But if it had not been advertised, and it’s price would have increased the same way, customers would switch to a substitute.
So thanks to the success of the commercial, the Molson beer company have increased their popularity and fidelity with their customers. And thanks to that new born link they have made their product more inelastic. Which means that they made their product feel like a necessity to their consumers and, if they change their price, the consumers would still purchase the product in a similar amount.

]]> By: Jakeb Stunz http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8806 Jakeb Stunz Wed, 28 Oct 2009 06:30:30 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8806 When the product is advertised it needs to separate itself from every other product in a market in order for customers to not respond to a raise in price. It needs to become less elastic or inelastic if the business is expecting rises in prices. When the product is advertised it needs to separate itself from every other product in a market in order for customers to not respond to a raise in price. It needs to become less elastic or inelastic if the business is expecting rises in prices.

]]> By: Melanie Beilke http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8636 Melanie Beilke Sun, 25 Oct 2009 16:50:21 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8636 When a product has been successfully advertised, they will always have an advantage in comparison to all the other substitute products. The advertisement made the canadian beer seem better than any other beer. The beer company Molson believes in peace, not in policing, grabbing the audiences and consumers attention towards the Molson beer. Immediately the consumers first thought of the Molson beer is connected with positive aspects. The advertiser "Joe" clearly said in the end of the ad. that he is Canadian, trying to get at least Canadian consumers to buy the Molson beer, only then they can be considered of being Canadian as well. However, the advertisement had a great impact on the way consumers thought and changed their taste by promoting their product the way they did. By the end of the ad. the Molson beer clearly got more inelastic than it was before. Consumers will not react negatively as the price of the Molson beer might increase, since it has been extremely glorified. The Molson beer company will make more profit, due to the video. When a product has been successfully advertised, they will always have an advantage in comparison to all the other substitute products. The advertisement made the canadian beer seem better than any other beer. The beer company Molson believes in peace, not in policing, grabbing the audiences and consumers attention towards the Molson beer. Immediately the consumers first thought of the Molson beer is connected with positive aspects.

The advertiser “Joe” clearly said in the end of the ad. that he is Canadian, trying to get at least Canadian consumers to buy the Molson beer, only then they can be considered of being Canadian as well. However, the advertisement had a great impact on the way consumers thought and changed their taste by promoting their product the way they did. By the end of the ad. the Molson beer clearly got more inelastic than it was before. Consumers will not react negatively as the price of the Molson beer might increase, since it has been extremely glorified. The Molson beer company will make more profit, due to the video.

]]> By: Daniel Graber http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8635 Daniel Graber Sun, 25 Oct 2009 11:07:43 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8635 A successful advertising campaign will affect the determinants of PED. In the case of Molson beer, the advertisement made the beer seem unique and patriotic. To a certain extent, it even made it seem like buying the beer was a necessity. By doing so, the amount of perfect substitutes for molten beer was reduced. Now, Labatt beer does not contain that "uniqueness and nationalist" feel that Molson beer does. Consequently, if the price if Molson beer increases, consumers will be less responsive to the change in price because it cannot easily be substituted by another brand beer. By creating this advertisement, Molson greatly increased their costs. However, they were clearly hoping that the advertisement would eventually lead to more profit. As the market for molten beer becomes more inelastic, consumers will be less responsive to a change in price. For instance, if the price of the beer increases, there won't be a significant change in the quantity demanded. As a result, Molson will be able to sell the same amount of beer (maybe a little les) for a higher price; this leads to a greater profit. A successful advertising campaign will affect the determinants of PED. In the case of Molson beer, the advertisement made the beer seem unique and patriotic. To a certain extent, it even made it seem like buying the beer was a necessity. By doing so, the amount of perfect substitutes for molten beer was reduced. Now, Labatt beer does not contain that “uniqueness and nationalist” feel that Molson beer does. Consequently, if the price if Molson beer increases, consumers will be less responsive to the change in price because it cannot easily be substituted by another brand beer.

By creating this advertisement, Molson greatly increased their costs. However, they were clearly hoping that the advertisement would eventually lead to more profit. As the market for molten beer becomes more inelastic, consumers will be less responsive to a change in price. For instance, if the price of the beer increases, there won’t be a significant change in the quantity demanded. As a result, Molson will be able to sell the same amount of beer (maybe a little les) for a higher price; this leads to a greater profit.

]]> By: Hanna http://welkerswikinomics.com/blog/2009/10/20/im-proud-to-be-a-canadian-and-i-like-beer/comment-page-1/#comment-8627 Hanna Sat, 24 Oct 2009 13:30:29 +0000 http://welkerswikinomics.com/blog/2007/09/21/im-proud-to-be-a-canadian-and-i-like-beer/#comment-8627 If an advertising campaign is successful, it means that the consumers’ liking of that product increases after viewing the advertisement. It will also cause the product to be memorable to the consumers, which is one reason why they would end up buying the Molson beer instead of the Labatt beer. When the consumers’ liking of the product increases, their demand for that product also increases, which means that they will still want to buy the product even if the price changes. If consumers are still willing to pay for a product even though the price changes, it means that they are not responsive to that change. A good way for producers to make their products more elastic is by advertising, as they did in the Canadian commercial. The commercial’s biggest influence on the people was probably that they felt more patriotic towards their country, which might be the reason why some of the consumers substituted the Labatt beer with the Molson Canadian beer. The overall effect was that the Molson Canadian beer became more elastic, while the Labatt beer became slightly more inelastic. It is in the interest of a firm like Molson to decrease the price elasticity of demand for its product because that means that they are able to sell their product at a higher price without losing customers. The consumers would still be willing to pay the price of the good, even if the price went up, because their demand is so high. If an advertising campaign is successful, it means that the consumers’ liking of that product increases after viewing the advertisement. It will also cause the product to be memorable to the consumers, which is one reason why they would end up buying the Molson beer instead of the Labatt beer. When the consumers’ liking of the product increases, their demand for that product also increases, which means that they will still want to buy the product even if the price changes. If consumers are still willing to pay for a product even though the price changes, it means that they are not responsive to that change. A good way for producers to make their products more elastic is by advertising, as they did in the Canadian commercial. The commercial’s biggest influence on the people was probably that they felt more patriotic towards their country, which might be the reason why some of the consumers substituted the Labatt beer with the Molson Canadian beer. The overall effect was that the Molson Canadian beer became more elastic, while the Labatt beer became slightly more inelastic.

It is in the interest of a firm like Molson to decrease the price elasticity of demand for its product because that means that they are able to sell their product at a higher price without losing customers. The consumers would still be willing to pay the price of the good, even if the price went up, because their demand is so high.

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