Goods with very inelastic demand tend to be goods with no easy substitutes

Goods with very inelastic demand tend to be goods with no easy substitutes

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Unformatted text preview: Goods with very inelastic demand tend to be goods with no easy substitutes, or essential goods that consumers cannot do without. For these goods, even when the price increases, demand stays relatively steady, because consumers have no other options, and feel that they still need to buy the same amount of goods. In the short run, gasoline could be considered an inelastic good, since it is difficult to completely alter transportation patterns in an immediate response to changes in gasoline prices. (Over the long run, however, consumers may change their habits and decrease their consumption of gasoline, using public transportation or carpools, once they realize that their costs have increased permanently). Another example might be staple foods. While luxury items such as caviar or Belgian chocolates aren't essential to our diet, basics such as bread, pasta, and rice are relatively indispensable. In other words, an increase such as bread, pasta, and rice are relatively indispensable....
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This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.

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Goods with very inelastic demand tend to be goods with no easy substitutes

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