Q:

What are examples of elastic and inelastic goods?

A:

Quick Answer

Examples of elastic goods are coffee, airline tickets and stocks. Examples of inelastic goods are water, electricity, and telephone service. The elasticity of a good is the sensitivity of its demand to changes in its price.

Know More

Full Answer

If an increase or decrease in price has little or no effect on the demand for the good, then the good is considered to be highly inelastic. Likewise, if an increase or decrease in price has a dramatic effect on the demand for the good, then the good is considered to be highly elastic. A couple of factors that determine the elasticity of goods include the existence of substitutes and disposable income. If a good has a close substitute, consumers choose to purchase the substitute if the good rises in price. Assuming that a consumer's income level remains the same, if the price of a good rises then so does its opportunity cost, which means that purchasing the same amount of the good as before comes at a higher expense. In situations in which prices are rising and incomes are constant, consumers choose not to purchase luxury goods, such as airline tickets and stocks. Goods such as water and electricity are inelastic because they have an innate biological or sociological demand.

Learn more about Economics
Sources:

Related Questions

  • Q:

    What are examples of products with elastic and inelastic supply?

    A:

    Examples of products that have elastic supplies are specifically branded items that have alternatives like Campbell's soup, Marlboro cigarettes and Porsche vehicles; products that have inelastic supplies are cigarettes, gasoline and salt. Products that have an inelastic supply are products that do not have a viable alternative, and buyers will continue to buy them despite the price increase.

    Full Answer >
    Filed Under:
  • Q:

    What is the difference between elastic and inelastic demand?

    A:

    The concepts of elastic and inelastic demand are used in economics to describe change processes, and the differences between the terms are defined by the amount of change occurring within a given system. Areas of economic study related to supply and demand utilize these concepts.

    Full Answer >
    Filed Under:
  • Q:

    What are disadvantages of monopolistic competition?

    A:

    Monopolies have a negative effect on the entire economy by making it harder for consumers to purchase goods, a trend that leads to lower production in the system. High prices do not affect only the consumer, they end up hurting the monopoly itself. Even systems with more than one competitor can be monopolistic if there are only a few. Competition benefits every human component in the economy.

    Full Answer >
    Filed Under:
  • Q:

    What are the three basic questions of microeconomics?

    A:

    The three basic questions of microeconomics are: "What should I produce," "How much should I produce," and "Who will buy these goods or services?" These three questions are critical to successfully managing a company, thus critical to understanding microeconomics.

    Full Answer >
    Filed Under:

Explore