Which good has more of an elastic demand? Explain. • Price of all toothpaste brands or...

Which good has more of an elastic demand? Explain.

• Price of all toothpaste brands or prices of all extra safety feautures in vehicles?

• Price of cigarettes or price of ice cream?

Solutions

Expert Solution

Elastic demand is when degree of responsiveness of quantity demanded for a commodity demnded is relatively more than the degree of change in price. Ex: A 20 % fall in price of good X leads to a 50 % rise in its demand. The elasticity value is greater than 1 in such cases.

Price of all toothpaste brands or prices of all extra safety feautures in vehicles?

The proportion of income spent on toothpaste is much less that that spent on extra safety feautures in vehicles. As a result the demand will be more elastic for extra safety feautures in vehicles. Extra safety features imply an addition to the existing basic features so are also not an absolute necessity and thus elastic in nature in terms of demand. Also since toothpaste is a necessity and has very low close substitutes its demand cannot fluctuate with change in price and hence it will have relatively inelastic demand.

Price of cigarettes or price of ice cream?

Cigarettes are usually consumed habitually (for such people it is a necessity) or for those who smoke ocassionally too, there are not many substitutes available. As a result for both reasons, the demand for cigarettes is relatively inelastic. As opposed to cigarettes, ice creams have more elastic demand because- they are not necessities, there are various other substitutes for a cold dessert and ice cream consumption can be postponed too.

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Say good X tends to be a relatively price-elastic good (demand is more price elastic than...

Say good X tends to be a relatively price-elastic good (demand is more price elastic than supply). Say the government imposes an excise tax on every unit of X buyers buy. The burden of this tax will probably fall more heavily on: sellers (gas stations) hard to say both sellers and buyers equally buyers

The more price elastic is the demand for a good or service, the higher will be...

The more price elastic is the demand for a good or service, the higher will be the acutal margin. Do you agree with this statement? Explain.

For any given price, the more elastic is the demand for a good, the greater will...

For any given price, the more elastic is the demand for a good, the greater will be the consumer surplus. Select one: True False A free good will be consumed up to the point at which its marginal utility is positive. Select one: True False As price falls along the demand curve for pretzels, _____. Select one: a. consumer surplus remains unchanged b. consumer surplus decreases c. total utility decreases d. consumer expenditure changes e. marginal utility increases Arnold is...

Describe three things that make the price elasticity of demand for a good more elastic.?

for each of the following, which good would you expect to have more elastic demand and...

for each of the following, which good would you expect to have more elastic demand and WHY? A) Tickets to Disneyland or Healthcare B) Starbucks Coffee or Coffee in general C) Airline Flights during the next year or Airline Flights during the next 3 years D) Milk or Chocolate Milk

Advise what Price Elasticity of Demand is. The more price-elastic demand is, the more responsive consumers...

Advise what Price Elasticity of Demand is. The more price-elastic demand is, the more responsive consumers are to a price change. TRUE or FALSE? Please Explain. The less price-elastic demand is, the less responsive consumers are to a price change. TRUE or FALSE? Please Explain.

Demand is more elastic for luxury goods and also for goods for which there are more...

Demand is more elastic for luxury goods and also for goods for which there are more substitutes, explain how these are related

Determine if the demand for the following products is price elastic or price inelastic, and explain...

Determine if the demand for the following products is price elastic or price inelastic, and explain your answer. i) Box of cereal sold in a grocery store ii) Gasoline as a commodity iii) Hotel rooms for people planning a vacation iv) Hotel rooms for people on business to meet an important client b) What principle do consumers follow to maximize the utility they derive while spending their money to buy the various products they need? (Minimum 50 words) c) Fill...

A good is more elastic when * a. it is easy to produce more at the...

A good is more elastic when * a. it is easy to produce more at the same cost b. it is made from rubber c. it is difficult to produce more at the same cost d. the marginal cost is equal to the price

2. If know a market has price elastic demand. will draw the demand curve with a....

2. If know a market has price elastic demand. will draw the demand curve with a. A relatively flat negative slope b. A relatively steep negative siope c. A relatively flat positive slope d. A relatively steep positive slope Suppose I tell you that the price elasticity demand for oranges is around 1.5, for bananas is around 0.7 for melons is of healthier (by eating more fruit and can only aff around 0. 3 We want people to eat to...

Subjects