the following commodities which has the lowest elasticity of demand : (a) tea (b) salt (c) car (d) house
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Salt has the lowest elasticity of demand
Explanation for correct option:
- Commodities that can not be cut from the budget with the increase in price are considered to have a low elasticity of demand.
- Such as salt, consumers can't stop using salt due to the increase in rice because it is an essential item.
- A change in price will not affect the demand.
Explanation for incorrect option:
People can
- Stop using cars and use public transport instead.
- Consume less tea.
- Stay in a less expensive or a rental house.
The increase in price affects the demand for all of these options. Therefore, the correct option is b) salt.
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