Petrol has inelastic price elasticity of demand in both the short and long run but chinaware has elastic price elasticity of demand in the both short and long run because:
A) petrol is more important than chinaware.
B) petrol is a necessity and chinaware is a luxury.
C) petrol cannot be compared to chinaware.
D) petrol is a luxury and chinaware is a necessity.

Question

Quizplus · Accepted Answer

Petrol is a necessity that people will continue to demand even if its price goes up, whereas chinaware is a luxury item that people are more likely to stop buying if the price increases. This means that petrol has a relatively inelastic price elasticity of demand, while chinaware has a relatively elastic price elasticity of demand.

Petrol Has Inelastic Price Elasticity of Demand in Both the Short