The price elasticity of demand for a good that is a necessity is likely to be: Group of answer choices

The correct answer is:

inelastic

Explanation:

Although the multiple-choice answers are missing, the price elasticity of demand for necessity goods is most of the time always inelastic.

Price Elasticity of Demand (PED) is a measure of the sensitivity of the change in the quantity of a good or service demanded to the change in the price of the good or service.

A PED is said to be elastic when the percentage change in the number of goods demanded is more than the percentage change in the price of the good, and the PED is more than 1. Luxury goods like cars, phones etc have elastic PEDs.

when PED is less than 1, it is said to be inelastic because the percentage change in the quantity demanded is less than the percentage change in the price. Necessity goods in this example are goods that are basic goods that one needs for life e.g. food. when the price of food increases, the demand does not more than the change in price, because people need food to live, so demand changes less proportionately.  

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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