Practice question · Sort into groups
Sort by elasticity type.
Groups: Elastic () · Inelastic ()
- Luxury goods (many substitutes)
- Insulin for diabetics
- Restaurant meals
- Electricity
- A specific brand of cereal
- Petrol in the short run
Hints
- Goods with close substitutes respond strongly to price.
- Necessities without substitutes respond weakly.
Show the answer
Elastic (): Luxury goods (many substitutes), A specific brand of cereal, Restaurant meals
Inelastic (): Petrol in the short run, Insulin for diabetics, Electricity
Why
Goods with substitutes (luxuries, brands, restaurants) are elastic; necessities without substitutes (fuel, medicine, utilities) are inelastic.
Practise Economic Applications
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