Answer to Question #253203 in Economics for Hina Gurung

Question

 Choose two products and explain why you think their demand is price elastic or price

inelastic. Be sure to consider the two factors that determine price elasticity in preparing

your answer.

Answer 1

Elastic demand means there is a substantial change in quantity demanded when another economic factor changes (typically the price of the good or service), whereas inelastic demand means that there is only a slight (or no change) in quantity demanded of the good or service when another economic factor is changed.

Examples of price inelastic demand. Petrol – petrol has few alternatives because people with a car need to buy petrol. For many driving is a necessity.

Soft Drinks. Soft drinks aren't a necessity, so a big increase in price would cause people to stop buying them or look for other brands.