Question

In: Economics

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.

Mansions or rental homes
Vanilla ice cream or desserts
Subway rides during the next 6 months or subway rides during the next 5 years
Pens in general or blue ballpoint pens

Solutions

Expert Solution

Mansions or rental homes    

This is related to the nature of the commodity. Mansions usually has elastic demand as mansions are luxuries. But the rental homes have inelastic demand as they are necessities.

Vanilla ice cream or desserts

This is related to availability of substitutes. Vanilla ice cream has elastic demand as it has many substitutes. But desserts do not have any close substitutes and has inelastic demand.

Subway rides during the next 6 months or subway rides during the next 5 years

This related with the time period. Subway rides during the next 5 years has elastic demand as it is in the long run. The subway rides during the next 6 months has inelastic demand as it is in the short run.

Pens in general or blue ballpoint pens

It is related to market area or scope of market. The blue ball point pens has generally an elastic demand as it can be substituted by other colour pens. Pens in general has a less elastic demand.

Rahul Sunny answered 1 year ago
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