Goods that are necessities are very likely to have:<\/p>\n
a) A very low supply<\/p>\n
b) highly elastic demand<\/p>\n
c) highly elastic supply<\/p>\n
d) very low demand<\/p>\n
e) highly inelastic demand<\/p>\n
Answer: e) highly inelastic demand<\/span><\/span><\/strong><\/p>\n Luxury products are very likely to have perfectly elastic demand whereas items like food, water, and shelter can best be described as having inelastic demand. Stylised facts of demand include inelastic demand which is where the quantity demanded for a good does not vary much when its price varies.<\/span><\/span><\/p>\n These are products that are considered by consumers as being indispensable that at no one point can a consumer replace these items no matter the cost. Consumers will remain in possession of these commodities even if they are priced up because they are absolutely necessary in the life of consumers. On the other hand, a reduction in price will probably not have a proportional effect on quantity demanded, as consumers already consume the necessary amounts of these necessities. This type of demand inelasticity of necessities implies that producers and suppliers have higher pricing flexibility as consumers cannot easily make changes in the quantity of necessities demanded regarding a change in prices.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Goods that are necessities are very likely to have: a) A very low supply b) highly elastic demand c) highly elastic supply d) very low […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\n