Determination of the Elasticity of Demand for Goods in the Consumer Basket

Abstract

The article considers structure of the consumer basket for one child, one workable and one incapable person. As a result, we figured that some products in the consumer basket are completely absent. For example, it does not include baby food, namely mixtures for newborns, which for reasons beyond their control a simply essential for nutrition. Features of consumer basket formation were analyzed. It was concluded that from 2000 to 2015 government did not review consumer basket at all, thus it did not make any changes in it. Keeping in mind that according to the law at that time, such procedure had to be done every five years. It is determined that most of their income Ukrainians spend on food, resulting in an average of 65%, although as reported by experts, only a third of income is supposed to be allocated for food. A comparison of consumer baskets in Ukraine and other countries. As a result of this comparison, we came to the conclusion that in Ukrainian consumer basket there are no such expenses as Internet, computer equipment, fuel and car repair, without which it is difficult to imagine life of a modern person. The elasticity of demand for consumer goods is calculated. As a result of these calculations, we came to the conclusion that most goods in it are inelastic demand, meaning the magnitude of demand changes by a smaller percentage than the price. We also assessed how changes in income affect the consumption of major food groups (meat, milk, fish, fruits, vegetables). We concluded that the lowest level of elasticity is wheat bread (0.073), potatoes (0.074) and buckwheat (0.09). Also there are products in the consumer basket with single elasticity. Meaning, with an increase in household income by 1%, their consumption will increase by the same amount. Dried fruits and dairy products can be considered as goods that have a single elasticity. There are also products that are in elastic demand, they include some cereals, tea, coffee and spices. Despite the increase in the minimum wage over the past five years, increase in prices for goods and services has had a negative effect. Given the current situation in our country and in the world, caused by the global Covid-19 pandemic, consumer basket should include products such as masks, antiseptics and gloves, because at the moment each of us spends a significant part of the budget on them.