Answer to Question #98522 in Microeconomics for Elaine

Question

Indicate for each pair of goods which good has the more elastic price demand and why? A)automobile,gasoline B)electricity, amusement park admission

Answer 1

A)automobile,gasoline - Elastic price demand ; The automobiles , gasoline are so loved that many consumers will pay a premium for such products. If the price rises for automobiles, many will continue to buy. If it was a less well-known brand like Dell computers, you would expect demand to be price elastic.

B)electricity, amusement park admission - Inelastic Price demand ; Likes of electricity have few alternatives because people with electric energy need source of power. The existence of weak substitutes as solar panels but generally the price for electricity still goes up make it very inelastic.