Goods that are considered to be needs tend to be:

A. Elastic when the price changes.

B. Inelastic when the price changes.

C. Elastic when the supply changes.

D. Inelastic when the supply changes.

Answer: B. Inelastic when the price changes.

Inelasticity of goods with change in price means such product is a necessity and therefore the demand for such product will remain unchanged irrespective of a change in price. Even if the price is lowered, the demand for that product still remains unchanged. Examples of such products are prescription drugs and petrol. Regardless of a change in price, the demand for petrol or drugs will not change. A reduction in price will lead to less revenue for the company. Therefore, a reduction in price of such goods will not be beneficial in any way to the manufacturer.

Economics

3 years ago

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