Why is the demand for a luxury generally more elastic (or less inelastic) than the demand for a necessity?
What will be an ideal response?
Demand for a necessity is generally less elastic than demand for a luxury because there are fewer substitutes for a necessity. Because there are more substitutes for a luxury than a necessity, the elasticity of demand for a luxury is larger is than the elasticity of demand for a necessity.
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In perfect competition, a firm’s marginal revenue equals the price of the product.
Answer the following statement true (T) or false (F)
An oligopoly can be characterized by production of either identical goods or different goods
a. True b. False Indicate whether the statement is true or false
Market failure
A. Occurs whenever the government pursues laissez-faire policies. B. Occurs whenever the government intervenes in the market mechanism. C. Occurs whenever an imperfection in the market mechanism prevents optimal outcomes. D. Never occurs.
Dumping involves a country selling its exports
A. to nations without a comparative advantage in producing the products. B. at a price lower than its cost of production. C. to nations that regularly impose tariffs. D. to nations that have no need for the products.