When incomes drop, what happens to the demand for an elastic product?

Question

BlackTom AI · Accepted Answer

First, restating the core idea: the question asks about how demand for an elastic product responds when incomes drop.
Option 1: 'It tends to decrease.' This aligns with economic intuition for a normal good with high income elasticity of demand; when incomes fall, quantity demanded of such goods tends to fall.
Option 2: 'It tends to increase slightly.' This would suggest that demand rises with lower incomes, which contradicts the typical behavior of elastic goods that rely on higher income for purchases; a decrease in income usually does not spur more demand for goods that are sensitive to price and income.
Option 3: 'It tends to increase significantly.' Similar to the previous, a substantial rise in demand due to income drop is unlikely for elastic goods, unless the product is a luxury substitute, but the premise here generally points to a decrease rather than an increase in demand when incomes fall.
Option 4: 'It remains unchanged.' This implies zero income effect on demand, which is inconsistent with the concept of price elasticity of demand and with standard income elasticity for elastic goods; changes in income typically alter demand.
In summary, the most reasonable option is that demand tends to decrease when incomes drop for an elastic product, since such goods respond noticeably to income changes and a drop in income reduces purchasing power.

When incomes drop, what happens to the demand for an elastic product?

查看解析

登录即可查看完整答案

类似问题

A monopolistically competitive firm’s demand curve will be highly elastic if which of the following exists?

A market with a high demand elasticity offers to consumers ___________ relative to a market with low demand elasticity

15 By providing better service, a firm is trying to: A. Make demand less elastic B. Make demand more elastic C. Make supply less elastic D. Make supply more elastic

An owner whose property is in a strong market position, where fewer services can be offered to tenants for the same dollar of rental income and where the owner will not lose tenants if the property is under-maintained, is said to participate in a market that has:

Demand analysis for a consumer product reveals that own price elasticity is -0.37, and income elasticity is 1.2. Provide an economic description of the product

A relatively inelastic demand is associated with _______________

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单