Final answer:
Luxury cars are likely to have elastic demand as they are not essential, and consumers can easily adjust their demand based on price fluctuations. Necessities such as salt, medicines, and water have inelastic demand because they are required regardless of price, with few or no close substitutes.
Step-by-step explanation:
Among the given options, luxury cars are likely to have elastic demand. Elastic demand indicates that the quantity demanded of a product will change significantly when its price changes. In the context of luxury cars, they are not necessary for survival, and consumers have the flexibility to choose between different brands or forego the purchase altogether when prices vary. In contrast, products such as salt, medicines, and water are considered necessities and usually have more inelastic demand because consumers need these items regardless of price changes. Life-saving medicines and basic needs like water typically have highly inelastic demand curves due to the lack of close substitutes.
Supply tends to play a more significant role in determining the price of luxuries like perfume, where demand is more elastic. Consumers are more responsive to price changes, and if prices are too high, they may simply not purchase the product. However, with necessities like food, demand is less elastic, meaning that changes in supply will not have as great an effect on the price, as consumers will still need to purchase these essential items.