The elasticity of demand is determined partly by whether the good is a necessity or a luxury.

Question

Quizplus · Accepted Answer

Generally, necessities have a less elastic demand because people are willing to pay whatever price is necessary to obtain these goods, while luxury items have a more elastic demand because people are more sensitive to changes in price and may be willing to forego purchasing the item if the price increases too much.

The Elasticity of Demand Is Determined Partly by Whether the Good