how does high priced goods have inelastic demand
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Products and services have inelastic demand when the change in quantity demanded is small when there is a change in price. Gasoline is an inelastic demand example, because the amount people buy remains roughly the same, even when prices increase. Likewise, they don't buy much more even if the price drops.
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High-priced goods already have a very limited demand so the change in price does not affect the existing demand.
Explanation:
- The goods which already have high prices have a very limited demand among the people having higher incomes.
- So, a change in the level of income of the products do not explicitly change the limited demand. This leads to inelastic demand for such products.
- Moreover, the high price goods have a constant price and only change less frequently. Due to this, their demand remains constant.
- An example can be Luxury cars which are bought by the rich.
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