Price elasticity of demand for a good depends on the price of the good relative to the consumer's incomes

The more elastic the demand is for a product, the bigger the response will be when changes are made that relate to a consumer's financial expenditures. Consumer's elasticity of demand varies depending on income, price changes, inflation, taxes, and other factors. As these factors weigh into purchases, consumers will cut back on items not considered essentials, all else remaining equal.

{Section title=C)TV and internet service plan !!!Answer and Explanation: C) The TV/internet service package would have the most elastic demand. Generally, consumers tend to spend less on goods and services they do not consider 'necessities,' all else equal. If a consumer's income increases, they are likely to purchase more of luxurious or non-essential items, and vice versa. While things like lighter fluid and thumbtacks may not seem like necessities, lighter fluid is certainly an emergency item most households keep handy. When consumers cut back on purchases, they would likely not consider thumbtacks to be a large purchase. So, answers A and B are incorrect. The choice could not be D either. A toothbrush is an absolute necessity. Therefore, a TV and internet service package, which would not be considered a necessity, is likely the most expensive commodity given in the four examples.