Question

For each of the following goods, state and defend the following:

(a) Whether you expect demand to be is relatively elastic or (b) whether you expect them to be inferior goods, necessities, or luxuries (c) One complementary good and one substitute good i. Natural gas ii. iPhone 11 iii. Used video games iv. Economics textbooks

Answer 1

a) Natural gas has an inelastic demand in the market i.e. even if the price rises the demand will not fall considerably. it will also be necessities. there are no substitutes of natural gas and car is the complement.

b) IPhones are elastic good as they take a larger share of budget and they will be considered as luxury i.e. if the income of the consumer rises the demand for the iPhones will increase. there are many substitutes they can be any android phones and complement will be network services.

c) Used video games are elastic demand and they are inferior good i.e. as the income rises the demand for used video games will fall, games are complement and nintendo is a substitute.

d) Economic books are inelastic, they are necessity and no substitute and notebooks can be complement.