Question

State with reasons whether the following items will have elastic or inelastic demand:
coke, matchbox, medicines, electricity, cigarettes, butter for a poor person and NCERT
books.

Answer 1

Elastic demand refers to a situation whereby a slight change in price will lead to a drastic change in the quantity demanded.

Elasticity of demand is more than 1.

Is usually a characteristic of goods considered luxuries:coke,cigarettes,butter for the poor

Inelastic demand refers to a situation whereby  a change in the price of a product leads to  little or no change in the quantity demanded.

Price elasticity is less than 1.

Products in this category are considered a necessity:matchbox,medicine,electricity,NCERT books