Question

Of the following items the one that is most elastic would be:

the purchase of a pack of cigarettes.

the purchase of a magazine.

the purchase of a cancer drug.

the purchase of a new car.

Answer 1

Answer is option D)

Car is a luxury .

Luxury items are most price elastic in nature. Bcoz their consumption is the most responsive towards price changes, as of price rise, then their consumption can be substituted for future.

Where as cancer drug is quite inelastic, bcoz even if it becomes costly , it's demand will not fall bcoz it's a life saving drug.

Similarly magazine & cigrrate packets are already quite cheap, further price change doesn't affect the quantity demanded.