Would you please give me some examples about income inelastic and income elastic ? thanks ~?

Question

Would you please give me some examples about income inelastic and income elastic ? thanks ~?

Answer 1

The higher the price elasticity, the more sensitive consumers are to price changes. A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more. A very low price elasticity implies just the opposite, that changes in price have little influence on demand.

Substitution serves as a pretty reliable predictor of elasticity of demand. For example, few substitutes for oil and gasoline exist, and as such, demand for these goods is relatively inelastic. However, products with a high elasticity usually have many substitutes. For example, potato chips are only one type of snack food out of many others, such as corn chips or crackers, and predictably, consumers have more room to turn to those substitutes if potato chips were to become more expensive.

In addition, the more necessary a good is, the lower the elasticity, as people will buy it no matter the price. Insulin is a good example.

To create a list of goods with relatively high price elasticity, think of products with many choices (substitutes) that are not really necessary: Potato chips, Company X's fried dumplings, unbranded bottled water, facial tissues, toilet paper, etc.