Question

Is the price elasticity of demand for a rare luxury car elastic, or inelastic?

Answer 1

It will be inelastic. Because a rare luxury car will have no close substitute.

Lack of close substitute will make the car price inelastic. Luxury goods are generally highly elastic if the price of the goods increased the demand will come down drastically and vice versa. Because her we have a "rare sports car" with no close substitute the demand for the car will not come down with an increase in the price of the good. For example, a Ferrari driven by Michael Schumacher. It is limited in the world and every person who can buy a Ferrari will love to have one. So limited supply but high demand will make the rare sports car price inelastic.