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Chapter 19: Q. 6 (page 434)

It is very difficult to find goods with perfectly elastic or perfectly inelastic demand. We can, however, find goods that lie near these extremes. Characterize demands for the following goods as being near perfectly elastic or near perfectly inelastic.

a. Corn grown and harvested by a small farmer in Iowa

b. Heroin for a drug addict

c. Water for a desert hiker

d. One of several optional textbooks in a pass-fail course

Short Answer

Expert verified

a) The demand for corn is near perfectly elastic.

b) The demand for a heroin for a drug addict is near perfectly inelastic.

c) The demand for water in a desert area is near perfectly inelastic.

d) The demand for optional textbook is a pass-fail course is near perfectly elastic.

Step by step solution

01

Given information(part a)

A modest farmer in Iowa grows corn and harvests it.

02

Explanation of corn growing and harvesting 

Corn demand is almost perfectly elastic. Individuals adjust their demand for maize in response to price fluctuations, taking into account the availability of corn and alternative replacements. The percentage change in demand is bigger than the percentage change in corn price terms.

03

Given information(part b) 

For a drug addict, the need for heroin is nearly inelastic.

04

Explanation of heroine for drug addict 

For a drug addict, the need for heroin is nearly inelastic. The demand for heroine is unaffected by price fluctuations. Changes in heroine prices have little effect on a drug user.

05

Given information(part c) 

In a desert, water demand is almost perfectly inelastic.

06

Explanation of water for a desert hiker.

In a desert environment, water demand is nearly inelastic. Because finding water in a desert is extremely difficult, demand does not adapt to price fluctuations. Demand that is perfectly inelastic is demand that does not change in response to price changes.

07

Given information(part d) 

In a pass-fail course, one of multiple optional textbooks.

08

Explanation of textbook in a pass-fail course 

In a pass-fail course, the demand for optional textbooks is nearly perfect elastic. Demand is elastic due to the variety of options available. Consumer demand shifts in response to price fluctuations.

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Most popular questions from this chapter

Table 19-2 indicates that the short-run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from \(50 to \)60, by what percentage would you expect the quantity of tires demanded to change?

Consider Figure 19-3. Following a price increase, is the quantity demanded more responsive to the price increase immediately, after an initial passage of time, and then after even more time has passed? Why is this so?

How will the long-run adjustment of Egyptian cotton supply from elimination of the subsidy likely affect the number of suppliers - that is, Egyptian cotton farmers? Explain.

Assume that the income elasticity of demand for hot dogs is -1.25 and that the income elasticity of demand for lobster is 1.25. Based on the fact that the measure for hot dogs is negative while that for lobster is positive, are these normal or inferior goods?

The diagram below depicts the demand curve for "miniburgers" in a nationwide fast-food market. Use the information in this diagram to answer the questions that follow.

Quantity (mini burgers per day)

a. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.20per miniburger and a price of role="math" localid="1651796932841" \)0.40per miniburger? Is demand elastic or inelastic over this range?

b. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.80 per miniburger and a price of \)1.20 per miniburger? Is demand elastic or inelastic over this range?

c. What is the price elasticity of demand along with the range of the demand curve between a price of \(1.60 per miniburger and a price of \)1.80 per m ? Is demand elastic or inelastic over this range?
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