ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inelastic-lots of substitutes
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Elastic-luxury
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Inelastic-necessity
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Elastic-not many substitutes
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Detailed explanation-1: -Goods that are considered essential have a low elasticity of demand. Electricity, gas, oil, and water are all relatively inelastic because consumers rely on these as necessities rather than luxuries. Also, keep in mind that the price elasticity of demand is very time-sensitive.
Detailed explanation-2: -We conclude that state-level electricity demand is very price inelastic in the short run, with a same-year elasticity of-0.1. The long-run elasticity is near-1, larger than often believed.
Detailed explanation-3: -Electricity is inelastic because it does not have any close substitutes. For examples, petrol and salt. Firms with monopoly power will face an inelastic demand curve.
Detailed explanation-4: -Electricity is inelastic because it doesn’t have any close substitutes. It is the same for petrol and salt. Firms with monopoly power will face an inelastic demand curve.
Detailed explanation-5: -Electricity demand in all sectors is highly price and income inelastic in the short run.