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
   please draw the curve and give examples

Answer 1

Necessary goods have inelastic demand and have elasticity of demand less than 1 while luxury goods are considered to be elastic goods and have elasticity of demand more than 1.

a) Eating out is considered to be a luxury for many and it would be luxury for everyone post COVID because people will avoid eating from outside. It will raise elasticity of demand for eating out and make it elastic.

b) Fruit and vegetable will always be necessary good and considered to be inelastic because people will always need these consumable items.

c) Movies will be a luxury good because people avoid going public places atleast for further few months. It will raise elasticity of demand of movies and make it more elastic.

d) Cars must be elastic good before COVID but post COVID it will be a necessary good because they will avoid travelling from public modes. It will reduce elasticity and make it inelastic.

e) Demand of i-Phones will be elastic in both periods which is pre and post COVID because these are considered to be luxury goods.