ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Demand for tangerines
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Demand for fruit
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Either A or B
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None of the above
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Detailed explanation-1: -Which of the two goods is more likely to be inelastically demanded and why: Demand for tangerines vs. demand for fruit? Fruit is more inelastically demanded because the overall category of fruit has fewer good substitutes than any one item in that category.
Detailed explanation-2: -The most common goods with inelastic demand are utilities, prescription drugs, and tobacco products.
Detailed explanation-3: -Examples of goods with inelastic demand include gasoline, necessary foods, and prescription drugs. When price changes on these items, demand doesn’t fluctuate much because these items are required in the everyday lives of most consumers.
Detailed explanation-4: -All fruits are own-price elastic with the exception of bananas which are slightly inelastic, but not significantly so. Apples, pears, and bananas are expenditure inelastic while oranges, grapes and other fruits are expenditure elastic.
Detailed explanation-5: -’Salt’ have perfectly inelastic demand.