ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The elasticity of demand is not constant for a given good or consumer, but varies depending on the current price level, quantity demanded, and the price change applied. You might still buy 20 scoops at 1.20 euros, but you might decrease your ice-cream consumption if the price increased to 1.50 euros per scoop.

Detailed explanation-2: -Veeman and Peng (1997) found the expenditure elasticity for ice cream to also be elastic (1.46). One reason for the difference in magnitude of these elasticity estimates over time may be changing demand trends.

Detailed explanation-3: -The income elasticity of demand for ice cream is 4, which is positive and greater than 1 meaning that it is a luxury good and income elastic, that is, as income increases, the demand for the product increases massively.

Detailed explanation-4: -Time. Over time, a good tends to become more elastic because consumers and businesses have more time to find alternatives or substitutes. For example, if the price of gasoline increases, people will eventually adjust to that change, i.e. they may drive less, use public transportation, or form carpools.