For each of the following pairs of goods, which good would you expect to have more...

For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

a. Required textbooks or mystery novels.

b. Tim McGraw music or country music recordings in general.

c. electricity during the next six months or electricity during the next five years.

d. Coke or soda in general.

Solutions

Expert Solution

Answer -
1.Mystery novels are more elastic than required textbooks. As textbooks are basic necessity for education which have no close substitute and mystery books are considered as luxury having more substitutes.
Thus demand for text books is less resonsive to change in price.But in case of mystery books demand is more resopnsive to price.

2.Tim Mc Graw music have more elastic demand than country music recordings in general.As market for MC Graw music is narrow based than country music so close substitute are easily available it.When price of the MC Graw music will increase people could substitute other.But if the price of country music will rise substitutes are becomes impossible.so the demand for Mc Graw team music is more elastic demand than country music in general.

3.Electricity during next six years have more elastic demand than electricity during next six months as with increase in price of electricity people could make changes or adjustments in the use of electricity in future. By installing energy saving devices use of electricity could be minimised. But during next six months close and proper substitute for the electricity isn't possible.so it is less elastic.

4.Coke has more elastic demand than soda because number of substitutes are available for coke in the market but generally for soda there is no close substitute available in the market so it becomes less elastic than coke.

Rahul Sunny answered 1 year ago

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