Discussion Question Explain two elastic and inelastic goods

Discussion Question: Explain two elastic and inelastic goods that you have recently purchased/not purchased when the price increased of those products. Please relate your answer to the market characteristics.

Solution

If there is an increase in price and no change in the amount of income spend on the good , there will be an inelastic reaction in demand; We have relatively inelastic demand for gasoline .When price of gasoline rises,Quantity demanded does not decrease so much.Beacuse it has very less substitutes.So we will still buy it at high prices.Another example of inelastic good is electricity.

If there is an increase in price and decrease in the amount of income spend on the good , there will be an elastic reaction in demand.Elastic goods are non necessities.For example,stocks,jewellery.