Ask Question
BusinessBusiness
1 May, 08:42

The demand for a luxury good whose purchase would exhaust a big portion of one's income is

Relatively price elastic.

Perfectly price inelastic.

Perfectly price elastic.

Relatively price inelastic.

+2
Answers (1)
  1. 1 May, 08:45
    0
    Relatively price elastic

    Explanation:

    Price elasticity is defined as the percentage change in quantality demanded with respect to percentage change in price. Lets explore it in detail.

    Goods whose quantity demanded remains stable irrespective of the change in price (in percentage terms), have perfectly price inelastic demand. Goods whose quantity demanded changes less (in percentage terms) then the change in their price (in percentage terms), have relatively price inelastic demand. Goods whose quantity demanded disappears with even a negligible change in price (in percentage terms), have perfectly price elastic demand. Goods whose quantity demanded changes more (in percentage terms) then the change in their price (in percentage terms), are relatively price elastic.

    Perfectly inelastic goods are the ones which have no substitute for example oxygen. If firms start selling us oxygen, we will have no other option except to buy it. Perfectly elastic goods have lots of substitute. So if the price of a product increases with minimal amount, the consumer will shift to its substitutes.

    Items that are considered necessity like bread are relatively price inelastic. Luxury goods, on the other hand, have relatively price elastic demand. Let's see an example.

    Bread is a necessity as it is a staple food. If the price of bread increases from $1 to $2 (100% increase), the consumption will not drop significantly. Instead a person having three meals a day, might come to two meals (33% decrease). Hence demand for bread is relatively price inelastic.

    As mentioned in the question, demand for luxury goods whose purchase would exhaust a big portion of one's income is relatively price elastic. Since it takes a large share of wallet, a slight increase in price will discourage the consumer to spend on it at all (it's not a need so why bother spending).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The demand for a luxury good whose purchase would exhaust a big portion of one's income is Relatively price elastic. Perfectly price ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
During the new employee orientation, the training officer meets with the new EMTs and explains to them the monthly training schedule and the classes they must attend for EMT recertification.
Answers (1)
In december 2017, quebecor printing received magazine subscriptions for 2018 from a customer, who paid $200 in cash. what would be the appropriate journal entry for this event?
Answers (1)
Giorgio Italian Market bought $4,200 worth of merchandise from Food Suppliers and signed a 90-day, 8% promissory note for the $4,200. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)
Answers (1)
Choose the option that best matches the description given. Program planning for the best may include therapy, effective discipline strategies, crisis treatment, and/or family counseling. 1.) Direct - contact services 2.) All-inclusive therapy 3.
Answers (2)
Digital certificates are issued by organizations known as what term?
Answers (1)
New Questions in Business
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called A. a production possibility curve. B. a production function. C. an isocost function. D.
Answers (1)
Guardrails should be installed along all open sides and ends of scaffolding before use. A. False B. True
Answers (1)
A fire destroys all of the merchandise of Coronado Company on February 10, 2017. Presented below is information compiled up to the date of the fire: Inventory, January 1, 2017 $423,300 Sales revenue to February 10, 2017 1,924,500 Purchases to
Answers (1)
How should you use operating costs when calculating incremental cash flows? Group of answer choices: A. Do not subtract operating costs, and then subtract taxes on operating income before operating costs. B. Subtract operating costs. C.
Answers (1)
The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance
Answers (1)
Home » Business » The demand for a luxury good whose purchase would exhaust a big portion of one's income is Relatively price elastic. Perfectly price inelastic. Perfectly price elastic. Relatively price inelastic.
Sign Up Forgot Password?