Question

Is the demand for the following is likely to be elastic or inelastic and why? 1....

Is the demand for the following is likely to be elastic or inelastic and why?

1. Food
2. Automobiles
3. Gasoline (short run)
4. Physician visits
5. Movies

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Answer #1

1. Food : demand is inelastic because it is a necessity meaning the demand for food is less responsive to price changes

2. Automobiles: demand is elastic. It is highly responsive to price changes

3. Gasoline (short run): in the short run the demand for gasoline is inelastic because it takes to time to adapt changes

4. Physician visits: the demand will be inelastic because it is a requirement or a necessity

5. Movies: the demand is elastic because it is a luxury. Changes in the price of movies will lead to changes in the quantity demanded

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