ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Because food is a necessity, it is generally believed that demand for food is relatively price ‘inelastic’, i.e. changes in price have a relatively small effect on the quantity purchased.

Detailed explanation-2: -Although demand for food is relatively inelastic, the power of small price changes, especially applied to foods most responsive to such changes, should not be underestimated given that their effects accumulate across a population.

Detailed explanation-3: -Elastic goods include luxury items and certain food and beverages as changes in their prices affect demand. Inelastic goods may include items such as tobacco and prescription drugs as demand often remains constant despite price changes.

Detailed explanation-4: -Soft Drinks. Soft drinks aren’t a necessity, so a big increase in price would cause people to stop buying them or look for other brands. Cereal. Like soft drinks, cereal isn’t a necessity and there are plenty of different choices. Clothing. Electronics. Cars.