ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Very elastic
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Not inelastic
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Very responsive
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Inelastic
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Detailed explanation-1: -what makes the demand inelastic for gasoline? There are many reasons that can make demand for a good inelastic. With gasoline, there are few substitute goods–a good that, if consumed, can reduce the consumption of another good.
Detailed explanation-2: -Inelastic products are usually necessities without acceptable substitutes. The most common goods with inelastic demand are utilities, prescription drugs, and tobacco products. Businesses offering such products maintain greater flexibility with prices because demand remains constant even if prices increase or decrease.
Detailed explanation-3: -This variation in the sensitivity to the price change is called elasticity. It is expected that the quantity of gasoline purchased is affected by the price of gasoline and by the economic conditions at that time. Therefore, as the price of gasoline rises the demand should fall.
Detailed explanation-4: -Petrol – petrol has few alternatives because people with a car need to buy petrol. For many driving is a necessity. Salt. A good produced by a monopoly. Tap water. Diamonds. Peak rail tickets. Cigarettes. Apple iPhones, iPads. 04-May-2019