ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In general, the greater the necessity of the product, the less elastic, or more inelastic, the demand will be, because substitutes are limited.

Detailed explanation-2: -Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand. Luxuries tend to have elastic demand. Demand is elastic when there are close substitutes.

Detailed explanation-3: -In general, necessities and medical treatments tend to be inelastic, while luxury goods tend to be most elastic.

Detailed explanation-4: -Inelastic demand occurs when the ratio of quantity demanded to price is between zero and one unit elastic. This typically occurs when a particular good or service lacks adequate substitutes and represents a necessity. Examples of goods with inelastic demand include gasoline, necessary foods, and prescription drugs.

Detailed explanation-5: -Inelastic demand is when a buyer’s demand for a product does not change as much as its change in price. When price increases by 20% and demand decreases by only 1%, demand is said to be inelastic.