Question

The elasticity of demand for necessary goods is

• A. Inelastic
• B. Elastic
• C. Perfectly elastic
• D. Perfectly inelastic

Hint:

- Necessities = Inelastic demand (consumers must buy it).
- Luxuries = Highly elastic demand (consumers easily postpone buying if price rises).

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price.

Step 2: Detailed Explanation:
Necessary goods (such as staple food, salt, and life-saving medicines) are essential for survival.
Even if the price of these necessary goods increases significantly, consumers cannot reduce their consumption much.
Conversely, if the price drops, consumption does not rise dramatically.
Therefore, the demand for necessary goods is relatively inelastic (price elasticity coefficient \(< 1\)).

Step 3: Final Answer:
The elasticity of demand for necessary goods is inelastic, which corresponds to option (A).