Select a product and discuss factors that affect its price, income, and cross elasticity of demand.
For example, if you select table salt, you could argue that since its price is low relative to income and it is generally considered a necessity, it has very inelastic price elasticity of demand. It has low or close to zero income elasticity of demand because people do not tend to consume more of it as income rises. The cross elasticity of demand between salt and salt substitutes would be positive because the products are substitutes. Foods that typically are used with salt would be complements, and they would have negative cross elasticity of demand.
Product: taxi services in a large city
Factors that affect price elasticity of demand:
The high availability of substitutes (e.g. public transit, personal cars) and the homogeneity of the product (i.e. there is no brand loyalty) contribute ...
This solution selects a product and discusses factors that affect price-, income-, and cross-elasticity of demand.