Final answer:
The correct answer is option b. The most price elastic products are likely to be clothing and auto repair, because they have many substitutes and are not essential, making consumers more sensitive to price changes in these categories. Necessities like housing and electricity display inelastic demand, as consumption changes little with price increases.
Step-by-step explanation:
The question concerns price elasticity, which is a measure of how the quantity demanded of a good changes in response to a change in its price. The concept is important in economics, underlining how consumers react to price changes in different product categories. When considering which products are most likely to be price elastic, we should think about goods that have lots of substitutes and are not necessities, since consumers can easily switch to alternatives if prices rise.
The correct answer to the question is: b. Clothing and auto repair. These products typically have many alternatives available in the market, making them more sensitive to price changes. Customers are more likely to reduce their consumption or seek substitutes if prices for clothing or auto repair services increase.
In contrast, necessities such as housing and electricity tend to have inelastic demand. Regardless of price changes, consumers still need these products, thus their consumption does not significantly decrease even when prices go up. This is why options a (sugar and eggs) and d (electricity and housing) are likely to be price inelastic.
China and glassware might be considered less essential than housing and electricity, but they are not necessarily purchased frequently or have as many close substitutes as clothing and personal services like auto repair, which is why option c is not the correct answer. Moreover, higher priced items, such as specific types of china and glassware, could be more price elastic than lower priced common goods, but in general, they remain less elastic than clothing and auto repairs.