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Elasticity.can you please these two question 1) Yachts are very elastic. Can you think of other...

Elasticity.can you please these two question

1) Yachts are very elastic. Can you think of other goods that would be elastic?

2) Cigarettes are very inelastic. Can you think of other goods that would be inelastic?

Solutions

Expert Solution

Elasticity is defined as the percentage change in quantity demanded upon percentage change in price.

A)

If the percentage change in the quantity demanded is greater than the percentage change in the price then it is said to be elastic demand. Hence |Ed| > 1 .This means the price responsiveness to quantity demand is more.

Highly elastic implies much more flatter demand curve or almost horizontal

Hence the other goods having highly elastic demand are ---- luxury goods like a sports vehicle etc..

B)

if the percentage change in the quantity demanded is less than the percentage change in the price then it is said to be inelastic demand. Hence 0 < |Ed| < 1. This means the price responsiveness to quantity demand is less.

Highly inelastic implies highly steeper demand curve or almost vertical

Hence the other goods having highly inelastic demand are ---- Medicines, a business trip by Aeroplane, necessities goods, gasoline etc...

Rahul Sunny answered 2 years ago
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