Answer to Question #35655 in Microeconomics for shoyeb

Question

2. For each following pair of goods, which good would you expect to have more elastic demand and why? No graph
a. Rice or T- shirt.
b. Petrol for one month or for 1 year.
c. Insulin or Napa.
d. Designer watch and cooking oil.
e. Salt or sugar.

Answer 1

a. More elastic demand for T-shirt, because rise as food is more important, especially in Asia (it is like bread there).
b. More elastic demand for petrol for 1 year, as people have more time to decrease their demand for it, using gas or electromobiles, or another kind of transport.
c. For Napa, as insulin is one of the most important medicines.
d. For watch, as it has very limited demand.
e. Salt, because sugar is required for many dishes, but salt is added to taste.