Question

6. Which of the following statements is (are) correct? A. The demand for strawberry ice cream is less elastic than the demand for ice cream because there are less substitutes for strawberry ice cream than ice cream. B. Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many close substitutes for insulin and insulin is considered by some to be a necessity C. If a good is a luxury, demand for the good would tend to be elastic and the demand curve for the good would tend to be relatively flat. D. All of the above E. Both B and C.

          6. Which of the following statements is (are) correct?
A. The demand for strawberry ice cream is less elastic than the demand for ice cream because there are
less substitutes for strawberry ice cream than ice cream.
B. Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many
close substitutes for insulin and insulin is considered by some to be a necessity
C. If a good is a luxury, demand for the good would tend to be elastic and the demand curve for the good
would tend to be relatively flat.
D. All of the above
E. Both B and C.

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6. Which of the following statements is (are) correct?
A. The demand for strawberry ice cream is less elastic than the demand for ice cream because there are
less substitutes for strawberry ice cream than ice cream.
B. Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many
close substitutes for insulin and insulin is considered by some to be a necessity
C. If a good is a luxury, demand for the good would tend to be elastic and the demand curve for the good
would tend to be relatively flat.
D. All of the above
E. Both B and C.

Added by Robert C.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Andrew Davis

10/21/2022

Step 1

Step 1: Recall key determinants of price elasticity of demand: availability of close substitutes (more substitutes → more elastic), whether a good is a necessity or a luxury (necessities → more inelastic; luxuries → more elastic), and how narrowly the good is Show more…

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Which of the following statements is (are) correct? A. The demand for strawberry ice cream is less elastic than the demand for ice cream because there are less substitutes for strawberry ice cream than ice cream. B. Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many close substitutes for insulin and insulin is considered by some to be a necessity C. If a good is a luxury, demand for the good would tend to be elastic and the demand curve for the good would tend to be relatively flat. D. All of the above E. Both B and C. 6. Which of the following statements is (are) correct? A. The demand for strawberry ice cream is less elastic than the demand for ice cream because there are less substitutes for strawberry ice cream than ice cream. B. Insulin for insulin-dependent diabetics tends to have an inelastic demand because there are not many close substitutes for insulin and insulin is considered by some to be a necessity C. would tend to be relatively flat. D. All of the above E. Both B and C.

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Transcript

00:01 So this is look, there's a whole lot of going on here.

00:02 I'm just going to sort of rapid fire these off.

00:05 Elasticity.

00:06 So one, which of these is true? a, elasticity equals slower.

00:12 These are different concepts.

00:15 These are related, but obviously not the same.

00:19 If they were the same, we wouldn't have two different names for them, right? the slope is, has units, elasticity does not have units, right? so slope is an absolute value.

00:30 Elasticity is in relative value.

00:34 Straight demand is both elastic and inelastic.

00:41 This is true.

00:43 This is a classic result from, you know, the understanding of elasticity.

00:48 Even if the demand curve is straight, because slope and elasticity are very different, all straight demand curves have inelastic and elastic portions.

00:56 B is the correct answer.

00:58 C, we'll rule out the rest.

01:04 Perfectly inelastic is equal to horizontal.

01:07 That's the other way around, right? equally, perfectly inelastic is vertical, right? not horizontal.

01:15 Perfectly inelastic is perfectly vertical, indicating that quantity doesn't change, right? which is what inelastic means.

01:22 And d is wrong.

01:23 D unit elastic implies price effects revenue...

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