Question

Explain whether you would expect the demand for the following goods to be elastic or inelastic and why:

1. Software programs
2. Cameras,
3. Notebook paper
4. Textbooks
5. All carbonated beverages
6. Mountain Dew

Answer 1

Ans) Elasticity is the measure of responsiveness of quantity demanded with change in price. Elasticity of the product depends upon the necessity, durability, preference or taste and the availability of the substitute. In reality there is no product which is purely elastic or inelastic. However the products exhibit a more of elastic or inelastic nature.

1. Software programs are quite inelastic in nature because technology evolves very fast and to keep your PC up to date with high performance, you need to update software. Further many functions are performed in particular softwares only and are incompatible with other softwares which again makes them inelastic.
2. Demand for camera is elastic in nature as you can extend the usage of old camera. Further, the availability of camera phones which provide superior quality picture also act as a substitute, affecting the demand for cameras.
3. Notebook paper is inelastic in nature as we need paper to write. We cannot replace it with other products. They are needed for offices and schools.
4. Textbooks are demand inelastic in nature because you will need books to clear your semesters and no perfect substitute for textbook is available. Further new editions of books are released frequently which reduces the possibility of using old books.
5. Demand for carbonated beverages is seen to be inelastic in nature. We prefer having a carbonated drink while having meals. Our taste for carbonated beverages makes it inelastic.
6. Demand for mountain dew is elastic in nature as there are n number of substitutes available, like coca cola pepsi, fanta etc.