Question
Download Solution PDFWhich of the following goods (commodities) have positive elasticities?
A. Necessities
B. Substitutes
C. Luxury goods
D. Complementary goods
E. Inferior goods
Choose the correct answer from the options given below:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is A, B and C only.
Key PointsThe correct answer is A, B, and C only.
The demand for luxury goods, substitutes, and necessities are all elastic. This means that a small change in the price of these goods will have a large impact on the quantity demanded.
The demand for complementary goods is inelastic. This means that a small change in the price of a complementary good will have a small impact on the quantity demanded of the other good.
The demand for inferior goods is also inelastic. However, the demand for inferior goods can become elastic if the price of the good becomes very high.
Here are some examples of goods with elastic demand:
- Luxury goods: Jewelry, fur coats, vacations
- Substitutes: Coffee and tea, Coke and Pepsi, Android and iPhone
- Necessities: Food, water, housing
- Here are some examples of goods with inelastic demand:
- Complementary goods: Cars and gasoline, computers and software
- Inferior goods: Ramen noodles, used clothing
Last updated on Jun 22, 2025
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