Final answer:
Demand for basic necessities (Option E) is most likely to be inelastic because these are essentials needed for survival, and people will continue to purchase them even if prices rise. Option E.
Step-by-step explanation:
The concept in question here is the price elasticity of demand, which measures how much the quantity demanded of a good responds to a change in the price of that good.
The student is asking which of the given options would most likely have inelastic demand. Inelastic demand means that consumers are less sensitive to price changes, and the quantity demanded does not change significantly when the price changes.
Option E, basic necessities, is the correct answer.
Demand for basic necessities like food, water, shelter, and in some cases, medicines, is typically inelastic because these are essentials that people need to survive, regardless of the price.
People will continue to purchase these items even if prices rise because there are no close substitutes for these essentials, and they cannot postpone their consumption.
Conversely, items like lamb chops and t-bone steaks (A), gourmet cheese (B), symphony tickets (C), and luxury watches (D) tend to have more elastic demand.
These items are not essential for survival and often have substitutes or are considered luxuries; if their prices go up, consumers can more easily reduce their consumption or choose a different product altogether.
Regarding the role of supply in determining price, for a basic necessity like food, supply may not play as significant a role as demand in price determination due to the inelastic nature of demand for food.
On the other hand, demand for luxury items, like perfume, is more elastic, so changes in supply can have a more prominent effect on the price since consumers are more responsive to price changes and can easily switch to substitutes.
So option E is correct.