Final answer:
DVD players have high price elasticity because they are luxury items with many substitutes, and their demand is sensitive to price changes. Products like luxury cars, high-end electronics, and vacation packages are also price elastic, while basic necessities like food, medication, and utilities are price inelastic.
Step-by-step explanation:
To understand the kind of elasticity that DVD players have, we first need to grasp the economic concept of elasticity. Elasticity refers to how much the demand for a product changes in response to a change in price. Products that have a high degree of elasticity see a significant change in demand when prices fluctuate, whereas inelastic products see little to no change in demand with price changes.
DVD players tend to have a high price elasticity. This is because they are considered non-essential luxury items and there exist many substitutes in the form of streaming services, digital downloads, and Blu-ray players. When the price of DVD players goes up, consumers are likely to switch to the alternatives. Similarly, if prices decrease, demand might increase significantly as more people feel they can afford to buy them.
Let's identify products that are price elastic and inelastic based on these principles:
- Price Elastic Products: Luxury cars, high-end electronics, and vacation packages. These are considered non-essential and have many substitutes, making their demand sensitive to price changes.
- Price Inelastic Products: Basic food items, prescription medications, and utilities like water or electricity. These are essential and often have fewer substitutes, so demand remains relatively steady regardless of price changes.