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How does the nature of a commodity influence its price elasticity of demand.

Answer» <html><body><p></p>Solution :i. When a commodity is a necessity like food grains, vegetables, <a href="https://interviewquestions.tuteehub.com/tag/medicines-1092667" style="font-weight:bold;" target="_blank" title="Click to know more about MEDICINES">MEDICINES</a>, etc., its demand is generally inelastic as it is required for human survival and its demand does not fluctuate much with <a href="https://interviewquestions.tuteehub.com/tag/change-913808" style="font-weight:bold;" target="_blank" title="Click to know more about CHANGE">CHANGE</a> in price.<br/>ii. When a commodity is a comfort like <a href="https://interviewquestions.tuteehub.com/tag/fan-456390" style="font-weight:bold;" target="_blank" title="Click to know more about FAN">FAN</a>, refrigerator, etc., its demand is generally elastic as consumer can postpone it.<br/> (iii) When a commodity is a luxury like AC, DVD player, etc., its demand is generally more elastic as compared to demand for comforts.<br/>iv. The term ‘luxury’ is a relative term as any item (like AC), may be a luxury for a <a href="https://interviewquestions.tuteehub.com/tag/poor-602678" style="font-weight:bold;" target="_blank" title="Click to know more about POOR">POOR</a> person but a necessity for a <a href="https://interviewquestions.tuteehub.com/tag/rich-614275" style="font-weight:bold;" target="_blank" title="Click to know more about RICH">RICH</a> person. consumption.<br/></body></html>


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