Asked by Terry Valentine on Jun 29, 2024
Verified
Suppose that good X is a luxury and that good Y is a necessity. Which good would you expect to have more price elastic demand?
Luxury
Goods or services that are considered non-essential but desirable, often associated with high quality and high price.
Price Elastic
The responsiveness of the quantity demanded or supplied of a good to a change in its price. High elasticity means quantity changes significantly with price changes.
Necessity
A requirement or indispensability; something that cannot be done without.
- Understand the determinants influencing the price elasticity of demand, including substitute availability and the classification of goods as luxuries or necessities.
Verified Answer
Learning Objectives
- Understand the determinants influencing the price elasticity of demand, including substitute availability and the classification of goods as luxuries or necessities.
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