Question

Discuss the elasticity of the following goods before and after Covid-19 (assuming that all restrictions have been eased):

1. Eating out
2. Fruit and vegetable
3. Movies
4. Cars
5. i-Phones

Answer 1

Elastic goods are luxury goods while inelastic goods necessary goods. A rise in price of inelastic demand does not decrease its quantity demanded by much while rise in price of elastic good reduce its demand by large.

a) Eating out will become a luxury good post COVID even if it is necessary for some before COVID because people will stop eating from outside to prevent themselves from virus.

b) Fruit and vegetable will always remain necessary good because these are needed even if people cook by themselves. Necessary goods have less elasticity which makes them inelastic.

c) Movies was considered to be luxury. Its elasticity will rise post COVID because people are afraid to go outside and make it more elastic.

d) Elasticity of car will fall and it become a necessary good which makes it elasticity of demand as inelastic because people will avoid public transport.

e) Elasticity of demand of i-Phones will rise and make it more elastic post COVID because these are luxury goods.