Answer to Question #308583 in Microeconomics for Steve

Question

For each of the following pairs of good, which good will you expect to have more price elastic demand and why?

1. Textbooks recommended by lecturers or mystery novels.

2. Downloads of tracks by Jay - Z or downloads of hip-hop music in general.

3. Heating oil during the next six months or heating oil during the next five years.

4. Lemonade or water.

Answer 1

Price Elasticity of Demand 

Price elasticity of demand refers to the extent to which customers respond to the demand of a commodity with a change in the price of a given commodity, whereas other factors remain constant over the given period.

1. textbooks recommended by lecturers or mystery novels

The demand for the suggested textbooks would be rigid and inelastic. In comparison to the mystery novels due to in availability of choices. Textbooks are read for given reasons while novels are read for general purpose. Hence, the demand for novels would be a lot elastic.

2. downloads of tracks by Jay-Z or downloads of hip-hop music in general

The download of hip-hop music is likely to be more elastic because the consumers do not settle for specific choices in comparison to the consumers who are downloading the tracks by Jay-Z.

3. heating oil during the next six months or heating oil during the next five years

The demand for heating of oil during the next five years is likely to be more elastic as the consumers would have more time for a re-evaluation of some other choices.

4. lemonade or water

The demand for lemonade would be elastic because there are substitutes for the product, unlike for water that has no close substitute.