CIPS L4m5 Commercial Negotiation · Free Practice Question Easy
Question 19
Which of the following would cause a demand curve for a good to be price inelastic?
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A
The luxury goods
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B
The necessary goods
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C
The consultancy service
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D
There are a great number of substitutes for the good
Reveal correct answer
Correct answer: B
Explanation
Essential goods and services such as electricity, fuel, basic food stuffs, commuter transport and habitual products such as tobacco, alcohol and sugar-based drinks are often sited as facing a relatively inelastic demand curve. This means when the price goes up, the quantity demanded does not decrease very much and so they are often the target of government taxation.
LO2, AC 2.2
Discussion
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