Question : The concept of elasticity is not applicable to:
Option 1: Necessities.
Option 2: Luxuries.
Option 3: Unique goods.
Option 4: All goods have an elasticity measure.
Correct Answer: All goods have an elasticity measure.
Solution : The correct answer is (d) All goods have an elasticity measure.
The concept of elasticity is a fundamental economic concept that applies to all goods and services. While the magnitude of elasticity may vary across different goods, all goods have an elasticity measure. Elasticity helps us understand the responsiveness of quantity demanded or supplied to changes in price, income, or other relevant factors.
Elasticity is not limited to specific types of goods. It applies to necessities, such as basic food items, as well as to luxuries, such as high-end luxury goods. It also applies to unique goods, although the availability of substitutes may impact the magnitude of elasticity for those goods.
Therefore, regardless of whether a good is a necessity, a luxury, or unique, the concept of elasticity can be applied to analyze and understand the responsiveness of demand or supply to various factors.
Question : Comfort is defined as the difference between
Option 1: Inferior goods and necessities
Option 2: Luxuries and inferior goods
Option 3: Necessities and luxuries
Option 4: None of the above.
Question : The concept of cross elasticity of demand is useful for businesses to determine:
Option 1: Pricing strategies for complementary goods.
Option 2: Pricing strategies for substitute goods.
Option 3: Pricing strategies for luxury goods.
Option 4: Pricing strategies for inferior goods.
Question : If the cross elasticity of demand between two goods is negative, it means the goods are:
Option 1: Substitutes.
Option 2: Complements.
Option 3: Inferior goods.
Option 4: Normal goods.
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