Question

What would you predict about the relative own price elasticity of demand for each of the following items? Explain your reasoning.

a.   food
b.   vegetables
c.   leafy vegetables
d.   leafy vegetables sold at your local supermarket
e.   leafy vegetables sold at your local supermarket on Wednesdays

Answer 1

Option e represents a highly elastic demand because it is narrowly defined and there are many substitutes available

Option d also represents a highly elastic demand but less elastic then option e. This is because there are other supermarkets as well selling leafy vegetables

Option c makes the demand less elastic than option e and d. It is also narrowly defined because there are other substitutes for leafy vegetables including non leafy vegetables. But this categorisation has made the demand less elastic

Option b makes the demand inelastic because there are very few substitutes for vegetables. This market is relatively broadly defined

Option A represents a market with most inelastic demand. There is no substitute for food due to which the demand for food is highly inelastic.