Question

Indicate whether the demand of below goods is elastic or inelastic. Think about each good in terms of the typical person's quantity demanded.

a. Cocoa Pebbles cereal
b. Tropicana orange juice
c. fast food in the food court at the mall
d. blood pressure and diabetes medication
e. public water and other utilities
f. cigarettes if smoke 3 packs a day

Answer 1

Elastic Demand : a , b , c

Inelastic Demand : d , e , f

Step-by-step explanation:

Demand Elasticity is responsiveness of quantity demanded to price change. If demand responds more to price change, Demand is Elastic. If demand responds less to price change, Demand is Inelastic.

If goods have non necessary consumption or/ & have more substitutes, its demand can be reduced or shifted to other alternatives easily. So, such demand is Elastic. If goods have necessary consumption or/& have less substitutes, demand can be reduced or shifted to other alternatives easily. So, such demand is Inelastic.

a, b , c : 'Cocoa' Pebbles cereal, 'Tropicana' Orange Juice, Fast food in mall food court - Are single brands or sellers of a good among many competitors, so scope of substitution make their demand elastic.

d , e , f : blood pressure and diabetes medication, public water and other utilities - are necessity goods and cigarettes if smoke 3 packs a day - implies the person is addicted to its consumption. So, their demand is Inelastic.