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Elastic demand

For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

a. Required textbooks or mystery novels
b. Beethoven recordings or classical music recordings in general
c. Subway rides during the next 6 months or subway rides during the next 5 years
d. Root beer or water

Solution Preview

For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

a. Required textbooks or mystery novels

Novels have more elastic demand because they have close substitutes and are luxury in nature. Required text books are necessary and have no close substitutes. For instance, if the price of novels were to increase, readers would read other books. A student on the other hand must use required textbook.

b. Beethoven recordings or classical music ...

Solution Summary

For each of the following pairs of goods, which good would you expect to have more elastic demand and why?

a. Required textbooks or mystery novels
b. Beethoven recordings or classical music recordings in general
c. Subway rides during the next 6 months or subway rides during the next 5 years
d. Root beer or water

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