Question

Which of the following have inelastic demand since a change in price would not change the quantity demanded?

1) luxuries
2) life necessities or needs
3) large supply of substitutes
4) large supply of complements

Answer 1

Life necessities or needs have inelastic demand because they are essential for survival or daily living, and people will need to purchase these regardless of price changes due to a lack of close substitutes.

Step-by-step explanation:

To determine which items have inelastic demand where a change in price will not significantly change the quantity demanded, we must look at the characteristics of goods that typically have inelastic demand curves. The answer here is life necessities or needs (option 2). Life necessities, such as life-saving drugs and gasoline, have inelastic demand because consumers need these items to live or function in society, and there are no close substitutes. As a result, even if the price increases, the quantity demanded does not decrease significantly.

Let's consider the options:

1. Luxuries, which typically have elastic demand because consumers can easily forego these items if the price becomes too high.
2. Life necessities or needs, which have inelastic demand. People will need to purchase these regardless of price changes because they are essential for survival or daily living and have no close substitutes.
3. A large supply of substitutes would likely lead to more elastic demand because consumers can switch to the substitutes if the price of the original good increases.
4. A large supply of complements may also lead to more elastic demand for a given product because the availability of complements can influence a consumer's decision to purchase the product.