Question : Which goods are most likely to have an elastic demand?
Option 1: Bread
Option 2: Salt
Option 3: Luxury cars
Option 4: Gasoline
Correct Answer: Luxury cars
Solution : The correct answer is (c) Luxury cars
Goods that are most likely to have an elastic demand are those that have substitutes readily available in the market and where consumers have the flexibility to adjust their consumption patterns in response to price changes. Luxury cars fall into this category because consumers have a range of alternatives to choose from, such as different car brands, models, or even alternative modes of transportation. When the price of luxury cars increases, consumers may choose to delay their purchase, opt for a different brand or model, or explore other transportation options. This responsiveness to price changes makes the demand for luxury cars relatively elastic.
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