The price elasticity of demand for a good depends on the pri

The price elasticity of demand for a good depends on the price of the good relative to consumers’ incomes. Which of the following goods has the most elastic demand? Coffee, Swing set, Car, Shoes

Solution

Among the above car being a luxury good has the most elastic demand.Luxury goods which are generally consumed by richer sections of society and are generally used as status symbols face a very elastic demand because an increase or decrease in price of the good can change its quantity demanded by a large extent.For example an increase in car\'s price would make it a higher status symbol hence demand goes up by a large extent and vice versa.