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Question
How does the nature of a good affect its elasticity of demand?
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Solution
The elasticity of demand for a good depends upon the nature of the good, i.e., whether the good is a necessary or a luxury good. The elasticity of demand for a necessary good is relatively small. For example, if the price of such good rises, its buyers generally are not able to reduce their demand.
The elasticity of demand for a good depends upon the nature of the good, i.e., whether the good is a necessary or a luxury good. The elasticity of demand for a necessary good is relatively small. For example, if the price of such good rises, its buyers generally are not able to reduce their demand.
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