Demand is generally income inelastic for ________.

Question

BlackTom AI · Accepted Answer

To tackle this question, I’ll evaluate what it means for demand to be income inelastic and then apply it to each option.
Option 1: 'inferior goods' — In general, inferior goods have higher income elasticity of demand negative or less than one in absolute value, meaning demand falls as income rises or doesn’t rise much; this is not the typical case described as income inelastic across the board, so this is not the correct choice.
Option 2: 'necessities such as basic food' — This aligns with the standard economic concept that necessities tend to have low income elasticity of demand; when income changes, quantity demanded changes only slightly, so demand is income inelastic. This matches the statement given in the question.
Option 3: 'T-bone steaks' — This is a specific luxury or non-essential item for many households, and luxury goods usually exhibit higher income elasticity of demand; demand for such items tends to rise more than proportionally with income, so this would be more income elastic, not inelastic.
Option 4: 'butter, caviar, and gourmet cheese' — These are also typically considered luxury or high-end items; their demand tends to respond more to income changes, implying higher income elasticity rather than inelasticity.
Option 5: 'symphony tickets' — Similar to luxury goods or discretionary spending, these often show a higher income elasticity as income grows, since people with higher incomes are more likely to purchase cultural or leisure goods; this is not typically income inelastic.
In summary, the general principle is that only necessities exhibit income inelastic demand, while luxuries and non-essentials show greater sensitivity to income changes. Thus, the option that best fits 'income inelastic for ________' is the one describing necessities such as basic food.

MKTG1199 Module 8: Wrap-Up

Demand is generally income inelastic for ________.

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