Consider the following pairs of goods. For which of the two goods would you expect the demand
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Question:
Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why? (In order to receive full credit for your answer, be sure to provide explanation for your answer.)
(a) water or diamonds
(b) insulin or nasal decongestant spray
(c) food in general or breakfast cereal
(d) gasoline over the course of a week or gasoline over the course of a year
(e) personal computers or IBM personal computers
Expert Answer:
a Water or diamonds The demand for water would likely be more price elastic compared to diamonds This is because water is a necessity for life and there are relatively few substitutes for it Therefore ... View the full answer
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