How does a person’s perception of a good as a necessity or a luxury affect his or her purchase of it?
A. If a good is perceived as a luxury, demand becomes elastic.
B. People who have a lot of money will buy goods even if they think they are a luxury.
C. A good that is perceived as expensive will no longer be considered a necessity.
D. A good that is perceived as a necessity will be purchased even if the price rises.
A or D???
D. A good that is perceived as a necessity will be purchased even if the price rises.
People will buy anything if it is a necessity like bread, milk or gas for their car, no matter how much money it costs.
Ahhh,the Apple watch, and most Apple products. D would be right if the price falls. But what if the Apple watch were priced at 1099 dollars? it wont be purchased by some, so answer a) is more realistic, the demand becomes elastic.
Let me point out something on Alyssa's response: Gasoline consumption rises when the price declines, and lowers when the price goes up. The same happens to bread and milk, ask any grocery store. Currently, Eggs are up in price, and demand has lessened. In cities, bus ridership goes up when gasoline prices go up.
I still think answer a is better.
one final note: demand for goods may be inelastic at lower prices, but elastic at higher prices. This is true often for perceived necessities. Sometime price changes the perceptions also. Go with answer a.
As high consumer debt shows, many people assume luxuries are necessities and buy them no matter what the price.
I agree with Bobpursley's answers.
The correct answer is A. If a good is perceived as a luxury, demand becomes elastic.
When a person perceives a good as a necessity, it means they consider it essential for their daily life or well-being. In this case, even if the price of the good rises, they will still be willing to purchase it because they view it as a requirement.
On the other hand, when a person perceives a good as a luxury, it means they consider it as something that is not essential for their basic needs. In this case, if the price of the good rises, they are more likely to reduce their demand for it or completely forego purchasing it. This is because the higher price makes the luxury good less affordable or worthwhile for them.
Therefore, when a good is perceived as a luxury, the demand for it becomes more responsive to changes in price, making it elastic. This means that even a small increase in the price may lead to a significant decrease in the quantity demanded.