Question

Evaluate one elastic and one inelastic good that you have recently consumed and relate to your answer to the market characteristics.

Answer 1

Goods like salt, gasoline and other necessities are mostly inelastic in demand. This is because there are relatively fewer substitutes for them and consumers are less responsive towards making a dramatic change in consumption for any price changes. The market for these goods mostly include monopolies or oligopolies where demand is overall inelastic.

Goods such as automobiles, furniture which are generally luxuries are mostly elastic in demand. This is because there are relatively more substitutes for them and consumers are highly responsive towards making a dramatic change in consumption for any price changes. The market for these goods mostly include monopolistically competitive ones where demand is overall elastic.