Answered: How would you characterize the demand…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

How would you characterize the demand for the following products and why?
• Steak
• Milk
• Life Saving Drug or Illegal, Addictive Drugs
• Durable Goods

Expert Solution

Step 1

The demand for steak is an example of the normal good in which the consumer demand will fall as the price increases and increases as the price decreases. Thus, the characteristics of steak make the demand for the product a normal demand. Thus, the demand for the product is elastic.

Milk is considered to be an essential good as the demand for milk remains constant at almost all the levels of price in the economy. Thus, the demand for Milk is considered to be inelastic at moderate changes in the price level in the economy.

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