Identify two goods each whose demand exhibits (a) high-income elasticity, (b) low-income elasticity, (c) high price elasticity, and (d) low price elasticity

a. High income elasticity:

High income elastic goods are those good the quantity demanded of a good is highly responsive to the consumer's change in income. The examples of such goods can be:

• Automobiles
• Restaurant meals

b. Low income elasticity:

Low income elasticity goods are those goods, the quantity demanded of which is less sensitive to the income changes of the consumers. The examples of such goods can be:

• Tobacco
• Sugar

c. High Price elastic:

High price elastic goods are highly sensitive to the price changes such that a percentage increase or decrease in price of the good will bring a large change in quantity demanded of the good. Examples of such goods are:

• Soft Drinks
• Hamburgers

d. Low price elasticity:

Low price elastic goods are those goods which are less sensitive to price changes such that increase or decrease in prices will not change the quantity demanded of the good by much amount. Examples are:

• Sugar
• Fuel

The differences in Elasticity of the goods can be due to following reasons:

1. Essential or non essential goods:

Essential goods demonstrate lower price elasticity where non essential goods may still be price sensitive in nature. This is because certain quantities of essential goods are needed for survival irrespective of their prices.

2. Habitual Goods:

Goods which are habitually used by the consumer may be less price and income elastic than the goods which are not so regularly used by the consumers.

3. Availability of substitutes:

Large availability of substitutes provides many options for the consumers to switch their consumption demands. This makes the demand of a good more price sensitive as any change in price of the good can alter the consumer's choices.

4. Brand loyalty:

If a brand established its image and rapport with the consumer's taste and preferences, then the consumer's demand for that good will become less income and price elastic.