question archive Which good is likely to have more elastic demand: soda or new cars? Explain your answer, also assume that all brands of each good experience a price change
Which good is likely to have more elastic demand: soda or new cars? Explain your answer, also assume that all brands of each good experience a price change
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Which good is likely to have more elastic demand: soda or new cars?
Explain your answer, also assume that all brands of each good experience a price change.
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The good that has a more elastic demand between new cars and soda is the former, new cars.
This is because the demand of soda is somehow inelastic and have been a staple drink in the market. Whether you are in a classy restaurant, at fast foods, or even at home, soda can be found. So, even if the price of soda increases or decreases, demand will not be affected comparing to cars. People can live without cars. Thus, when prices of cars increases, consumers can forgo their plan to buy a car.
