which one of the following types of products is not subject to inelastic demand?
Which one of the following types of products is not subject to inelastic demand?
Answer:
Products that are not subject to inelastic demand are those for which demand is highly responsive to price changes. In other words, when the price of these products changes, the quantity demanded changes significantly.
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Luxury Goods: Luxury goods, such as designer clothing, high-end electronics, or expensive cars, are generally not considered necessities. Consumers can easily postpone or reduce purchases of luxury goods if the prices increase. Therefore, these products usually have elastic demand.
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Non-Essential Services: Services that are not essential for daily life, like spa treatments, luxury vacations, or premium memberships, often fall under products with elastic demand. Consumers tend to be more sensitive to price changes for non-essential services and may adjust their consumption accordingly.
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Highly Competitive Markets: In highly competitive markets where numerous substitutes are available, products are more likely to have elastic demand. If one product raises its price, consumers can easily switch to a cheaper alternative without significantly affecting their satisfaction or needs.
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Products with Close Substitutes: When products have close substitutes, consumers have more options to choose from. In such cases, even a slight price increase for a product can lead consumers to switch to a substitute with a lower price, indicating elastic demand.
In summary, products that are considered non-essential, luxury items, in highly competitive markets, or have close substitutes are generally not subject to inelastic demand.
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