Question

In economics, if a good is inelastic,

Answer 1

In economics, if a good is inelastic, then its supply or demand is not sensitive to price changes.

Changes or fluctuations in market prices does not affect the supply and the Demand of inelastic goods.

Further Explanation;

• Inelastic goods, are types of goods whose demand and supply is not affected by changes in market prices. That is an increase or decrease in market price does not affect their supply or demand.
• When the price of an inelastic good changes, its supply and demand is unaffected.
• Examples of such goods include, water and food. Therefore, for inelastic goods, the consumer buying strength and habits remain the same.

Demand and supply in determination of market price

• Demand refers to the quantity of goods or services that consumers are willing and able to buy at a particular price while supply is the quantity of goods or services that suppliers are willing to supply to the market at a particular price.  

• One of the factor that determine market prices are the forces of demand and supply, this is based on the ability and willingness of buyers and sellers to undertake selling and buying.
• Buying and selling occurs at an equilibrium price that is agreed upon by sellers and buyers.  
• This means the sellers and buyers are willing to exchange a certain quantity of a commodity at this price. Thus, price depends on the demand and supply in the market.
• However, for inelastic goods such as water and food, the consumer has no option than to buy them at existing prices since they are necessity goods.

Keywords; Inelastic goods, demand and supply, market price.

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Level; High school  

Subject: Business

Topic: Demand and supply

Sub-topic: Types of goods

Answer 2

In economics, if a good is inelastic, its supply or demand is not sensitive to price changes.

Further Explanation:

Inelastic Demand: It means that the quantity demanded will not be affected by the change in prices.

Inelastic Supply:  It means that the quantity supplied will not be affected by the change in prices.

Justification for the correct and incorrect answer:

Consumers have lost interest in purchasing it: This option is incorrect.

If a good is inelastic, it does not mean that consumer has lost their interest in purchasing it. It might be possible that they do not need the goods.

Producers have lost interest in manufacturing it: This option is incorrect.

If a good is inelastic, it does not mean that the producer has lost their interest in manufacturing it.

It might be possible that the good has limited demand in the market.

Its supply or demand is too sensitive to price changes: This option is incorrect.

If the supply and demand for the goods is too sensitive to change in price, then the goods will have an elastic demand.

Its supply or demand is not sensitive to price changes: This option is correct.

If the good is inelastic, its supply or demand will not be sensitive to price changes.

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Answer details:

Grade: High School

Subject: Economics

Chapter: Elasticity of demand

Keywords: inelastic demand, inelastic supply, consumers have lost interest in purchasing it, producers have lost interest in manufacturing it, its supply or demand, too sensitive to price changes, not sensitive to price changes.