Asked by Simon Kozloff on Jul 21, 2024
Verified
Luxury items tend to have ________ demand, and necessities tend to have ________ demand.
A) relatively elastic; inelastic
B) relatively inelastic; elastic
C) perfectly elastic; perfectly inelastic
D) unit elastic; perfectly inelastic
Elastic Demand
Elastic Demand occurs when the quantity demanded of a product changes significantly as its price changes.
Luxury Items
Goods and services that are considered non-essential but desirable, often characterized by their high quality, exclusivity, and high price.
Necessities
Basic needs or essential goods and services required for individuals to maintain a minimum standard of living, such as food, shelter, and healthcare.
- Acquire knowledge about how demand elasticity influences expenditure on goods, particularly the differences between luxurious items and necessities.
Verified Answer
GC
Gillian ClymerJul 24, 2024
Final Answer :
A
Explanation :
Luxury items have relatively elastic demand because consumers are more sensitive to price changes, meaning they will buy significantly less if the price increases. Necessities have inelastic demand because consumers will continue to buy them even if the price increases, as these items are essential for daily life.
Learning Objectives
- Acquire knowledge about how demand elasticity influences expenditure on goods, particularly the differences between luxurious items and necessities.