For each pair of commodities, state which do you think is more elastic and give your reasons: perfume and salt; penicillin and icecream; automobiles and automobile tires.

1) Salt is considered as a necessity for an individual in the consumption basket. It means the consumption of salt cannot be avoided and individuals incur a fixed proportion of their income over regular time intervals. According to this fixed demand pattern, salt as a commodity enjoys inelastic demand as compared to perfume. The demand for the perfume can be easily altered depending on the prices, introduction of new fragrances and other factors. So, this can be concluded that the demand for perfume is more elastic relative to the salt.

2) Penicillin was the antibiotic used by the doctors to kill specific bacteria and major changes have been made to the face of medicine. It is something which is kept by individuals to avoid illness; whereas, ice-cream is a normal good whose consumption highly depends on the consumer?s preferences. So, it is concluded that the demand for ice-cream is more elastic as compared to penicillin or its substitutes.

3) Automobiles require large expenditures by the individuals and are used to commute; whereas, the proportion of expenditure spent on the automobile tire is relatively small as the tires can be used only for few years with proper maintenance. As the individuals need large money sum to buy, the demand for automobiles is relatively more inelastic as compared to automobile tires.