Rank the following goods from most elastic to least elastic (inelastic). Explain why you choose the particular ranking.
c) European tour.
e) honda accord.
f) dijon mustard.
The elasticity of demand:
The elasticity of demand measures the change in the quantity demanded of particular goods and services, due to sudden changes in the prices of these goods and services. Although other economic factors like income of the consumer, relative prices of goods can also lead to change in the quantity demanded and are used to measure the elasticity of demand.
Answer and Explanation: 1
Ranking in the order of most elastic to inelastic on the basis of their price elasticity of demand we have the following:
Although the comparative market is too broad, in economics, it is known that the necessary goods like salt, beef are inelastic to price changes. However, luxury goods like Honda cars and European tours are more elastic to price changes because of the number of consumers of these goods.
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fromChapter 3 / Lesson 7
Understand what elasticity of demand is and discover different types of elasticity of demand. Learn how it is measured and review the elasticity of demand formula.