Answered: How would you characterize the demand…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter7: Demand And Supply

Section: Chapter Questions

Problem 1AA

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Question

How would you characterize the demand for the following products and why?
• Steak
• Milk
• Life Saving Drug or Illegal, Addictive Drugs
• Durable Goods

Expert Solution

Step 1

The demand for steak is an example of the normal good in which the consumer demand will fall as the price increases and increases as the price decreases. Thus, the characteristics of steak make the demand for the product a normal demand. Thus, the demand for the product is elastic.

Milk is considered to be an essential good as the demand for milk remains constant at almost all the levels of price in the economy. Thus, the demand for Milk is considered to be inelastic at moderate changes in the price level in the economy.

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