Princios De Economia

Mystery novels have more elastic demand than required textbooks, because mystery novels

have close substitutes and are a luxury good, while required textbooks are a necessity with no close

substitutes. If the price of mystery novels were to rise, readers could substitute other types of novels, or

buy fewer novels altogether. But if the price of required textbooks were to rise, students would have

little choice but to pay the higher price. Thus, the quantity demanded of required textbooks is less

responsive to price than the quantity demanded of mystery novels.

b. Beethoven recordings have more elastic demand than classical music recordings in general.

Beethoven recordings are a narrower market than classical music recordings, so it is easy to find close

substitutes for them. If the price of Beethoven recordings were to rise, people could substitute other

classical recordings, like Mozart. But if the price of all classical recordings were to rise, substitution would be more difficult (a transition from classical music to rap is unlikely!). Thus, the quantity

demanded of classical recordings is less responsive to price than the quantity demanded of Beethoven

recordings.

c. Subway rides during the next five years have more elastic demand than subway rides during the

next six months. Goods have a more elastic demand over longer time horizons. If the fare for a subway

ride was to rise temporarily, consumers could not switch to other forms of transportation without great

expense or great inconvenience. But if the fare for a subway ride was to remain high for a long time,

people would gradually switch to alternative forms of transportation. As a result, the quantity

demanded of subway rides during the next six months will be less responsive to changes in the price

than the quantity demanded of subway rides during the next five years.

d. Root beer has more elastic demand than water. Root beer is a luxury with close substitutes,

while water is a necessity with no close substitutes. If the price of water were to rise, consumers have

little choice but to pay the higher price. But if the price of root beer were to rise, consumers could easily

switch to other sodas. So the quantity demanded of root beer is more responsive to changes in price

than the quantity demanded of water.

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