1)Demand for agricultural products can be described as: a) demand that increases proportionally with income. b) low for

Question

1)Demand for agricultural products can be described as: a) demand that increases proportionally with income. b) low for domestic buyers. c) inelastic. d) elastic. 2) Which of the following goods would likely have the most inelastic demand curve? 1. insulin for a diabetic 2. elective cosmetic surgery 3. taxicab transportation for a family vacationing in Baltimore. 4. an iPhone

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1) Demand for agricultural products can be described as c) inelastic. The demand for agricultural products tends to be inelastic because they are mostly foodstuffs, which are the main necessities of life. This implies that consumers are not sensitive to price changes. A fall in price will not expand their consumption greatly, nor will it contract due to a price increase. The demand for agricultural produce does not increase proportionally with income since it is inelastic. Therefore, an increase in income may cause a substitution effect, where they may choose to buy higher qualities or better products. 2) Which of the following goods would likely have the most inelastic demand curve? 1. insulin for a diabetic Yes, this would be the most inelastic demand because insulin is absolutely necessary and there is no substitute. 2. elective cosmetic surgery No, this is a luxury item that is not necessary. 3. taxicab transportation for a family vacationing in Baltimore No, this is necessary, but there are substitutes (rental car or a bus). 4. an iPhone No, a phone may be a necessity, but there are other brands that can be substituted.

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1)Demand for agricultural products can be described as: a) demand that increases proportionally with income

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Archived Solution

1. insulin for a diabetic	Yes, this would be the most inelastic demand because insulin is absolutely necessary and there is no substitute.
2. elective cosmetic surgery	No, this is a luxury item that is not necessary.
3. taxicab transportation for a family vacationing in Baltimore	No, this is necessary, but there are substitutes (rental car or a bus).
4. an iPhone	No, a phone may be a necessity, but there are other brands that can be substituted.