Identify three goods each for which your demand is (a) elastic or (b) inelastic. What accounts for the differences in elasticity?

Thank you for using the Jiskha Homework Help Forum. Let me help by explaining the difference between elastic and inelastic demand.

elastic demand means the demand changes when the price changes. For example, I want 10 but the price goes up so now I want only 5.

inelastic demand means the quantity demanded does not change much when the price changes. For example, I want 10 but the price goes way up. However, I still order 10.

Now you pick!

SraJMcGin - an interesting, but not completely correct, description of elasticity.

Elasticity of demand is the (percentage change in quantity demanded) divided by the (percentage change in price). That is:
E=((%dQ)/(%dP)). (Here, d means change)

E is always negative, but we usually express E in absolute value terms (i.e., as a positive number)

We say something is elastic when E is greater than one (absolute value) meaning that if price changes by x percent, consumption will change by more than x percent. Many food products (beef, chicken, bananas) are thought to have elastic demands.

Conversely, if the E is less than one, the elasticity is inelastic. Cigarettes and gasoline fall into this category.

A good for which the demand is elastic:

1. Beef
2. Bananas
3. Clothing

A good for which the demand is inelastic:
1. Cigarettes
2. Gasoline
3. Prescription drugs

To identify three goods each for which the demand is elastic or inelastic, we need to consider the factors that determine elasticity. Here are some factors that account for the differences in elasticity:

1. Availability of substitutes: If there are many substitutes available for a good, the demand for that good is likely to be more elastic. For example, if the price of a particular brand of cereal increases significantly, consumers may easily switch to other brands or types of cereal. Therefore, cereal can be considered a good with elastic demand.

2. Necessity vs. luxury: Goods that are necessities, like food or basic healthcare, tend to have inelastic demand. People need these goods regardless of price changes, so the quantity demanded does not change much. On the other hand, luxury goods, such as high-end designer clothing or fancy electronics, have more elastic demand because consumers can easily reduce their purchases if the prices increase.

3. Time Horizon: The elasticity of demand can also depend on the time horizon considered. For example, in the short run, demand for gasoline may be relatively inelastic because people still need to commute to work or school. However, in the long run, consumers have more flexibility to find alternative modes of transportation or to switch to more fuel-efficient vehicles, leading to more elastic demand for gasoline.

Based on these factors, here are three goods each for which demand is (a) elastic or (b) inelastic:

(a) Goods with elastic demand:
- Airline tickets: Consumers have the option to delay or cancel their trip or find alternative means of transportation if the prices increase significantly.
- Soft drinks: There are many alternatives available, such as juices, water, or other beverages, which makes the demand for soft drinks more elastic.
- Movie tickets: Consumers have multiple entertainment options, such as streaming services or renting movies, which makes the demand for movie tickets more elastic.

(b) Goods with inelastic demand:
- Prescription medications: These are often necessary for individuals' health, and alternatives may not be available, making the demand for prescription medications relatively inelastic.
- Salt or basic food items: These are essential for cooking and consumption, and consumers are unlikely to significantly reduce their purchases even if the prices increase.
- Electricity: It is a necessity for households and businesses, and consumers may not have many alternatives in the short run, making the demand for electricity relatively inelastic.

Remember, the elasticity of demand can vary depending on various factors, so these examples are not exhaustive.

Sorry for the confusion. Here are three goods each for which the demand is elastic and inelastic:

(a) Elastic Demand:
1. Luxury cars: When the price of luxury cars increases, consumers are more likely to reduce their demand for such expensive items and opt for more affordable alternatives.
2. Airline tickets: When the price of airline tickets increases, consumers may choose to delay or cancel their travel plans, or they may search for cheaper alternatives such as driving, taking a train, or utilizing discount airlines.
3. Restaurant meals: When the price of restaurant meals increases, consumers may choose to cook at home or opt for less expensive dining options such as fast food or takeout.

The elasticity of demand for these goods is higher because consumers have more flexibility in their purchasing decisions. They can easily find substitutes or adjust their consumption patterns in response to price changes.

(b) Inelastic Demand:
1. Prescription drugs: Even if the price of prescription drugs increases, consumers are more likely to continue purchasing them as they are necessary for their health and well-being.
2. Gasoline: Even if the price of gasoline increases, consumers still need to use it for transportation, and there are limited alternatives available for most people.
3. Salt: Even if the price of salt increases, consumers are still likely to purchase it as it is a basic necessity in many food preparations.

The elasticity of demand for these goods is lower because they are considered essential or have limited substitutes available. Consumers have a relatively less flexible demand and are willing to pay higher prices to obtain these goods.