Which of the following products will have an inelastic demand?
A Cigarettes
B Clothing
C Air travel
D Furniture
The correct answer and explanation is:
The correct answer is A) Cigarettes.
Inelastic demand refers to a situation where the quantity demanded of a product does not significantly change in response to price changes. In other words, when the price increases or decreases, consumers are still willing to buy roughly the same quantity of the product.
Cigarettes are considered a product with inelastic demand because many smokers have a strong addiction to nicotine, which makes them less sensitive to price changes. Even when the price of cigarettes increases due to taxes or other reasons, smokers continue purchasing them because of the dependency on nicotine. While some smokers may try to reduce consumption or quit, the demand for cigarettes generally remains relatively stable, even with higher prices. This is a key characteristic of inelastic goods, where the necessity or addiction of the product leads to relatively constant consumption regardless of price fluctuations.
On the other hand, products like clothing (B), air travel (C), and furniture (D) generally have more elastic demand. For instance, if clothing prices rise, consumers can substitute with lower-priced alternatives or delay their purchase. Similarly, air travel and furniture are more likely to be influenced by price changes since these are not everyday necessities, and consumers can either seek cheaper alternatives or postpone purchasing. This makes their demand more elastic compared to cigarettes, which are less sensitive to price changes due to their addictive nature.
In summary, cigarettes are the best example of a product with inelastic demand, as consumers continue purchasing them even if prices increase, largely due to addiction and lack of readily available substitutes.