Answer to Question #274522 in Management for rokk

Question

Problem 3:: Which of the following goods are likely to have elastic demand, and which are likely to have inelastic demand? Explain and justify your answer.

Home heating oil

Pepsi

Chocolate

Water

Heart medication

Oriental rugs

Answer 1

The elasticity of demand, also known as demand elasticity, is a measure of how sensitive demand for a commodity is to changes in other economic factors like price or income. Because the price of a good or service is the most common economic element used to measure it, it is commonly referred to as price elasticity of demand. Example:

1. Home heating oil
2. Oriental rugs
3. Water

A product that is inelastic, on the other hand, is characterized as one for which a change in price has no meaningful impact on demand. Example:

1. Pepsi
2. Chocolate
3. Heart medication