Question

1. for each of the following pairs of goods, which good would you expect to have a more elastic demand and why? a. elastic means: i. gasoline or diamonds ii. food from a garden or food from kroger iii. netflix or local tv

Explanation:

• i. Diamonds: Diamonds are a luxury good, while gasoline is a necessity for many with cars. Luxury goods typically have more elastic demand as consumers can easily forgo them when prices change.
• ii. Food from Kroger: Food from a garden may be seen as more unique or with a different quality - perception. Food from Kroger has more substitutes in the market (other grocery stores, online food - delivery services etc.), so its demand is more elastic.
• iii. Netflix: There are more substitutes for Netflix such as other streaming services (Hulu, Amazon Prime Video etc.). Local TV has fewer direct substitutes in the traditional TV - watching domain, so Netflix has more elastic demand.

Answer:

i. Diamonds
ii. Food from Kroger
iii. Netflix