Are luxury goods elastic or inelastic?
Understand the Problem
The question is asking whether the demand for luxury goods changes significantly with a change in price, indicating whether they are elastic or inelastic. Elastic demand means that consumers will buy much less of a good if the price increases, while inelastic demand means that price changes do not significantly affect the quantity demanded.
Answer
Elastic
The demand for luxury goods is typically elastic.
Answer for screen readers
The demand for luxury goods is typically elastic.
More Information
Luxury goods are not essential for daily living, making their demand sensitive to price changes. When prices rise, the demand for such goods tends to decrease significantly because consumers can easily forego these non-essential items.
Sources
- Price Elasticity of Demand: Examples - symson.com
- Do luxury goods have elastic demand? - Quora - quora.com
- Elasticity vs. Inelasticity of Demand: What's the Difference? - investopedia.com
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