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Question
How does the nature of a good effect its elasticity of demand?
Solution
Necessary goods such as salt, kerosene oil, matchboxes, textbooks etc. have a less than unitary elastic demand. Luxuries such as air conditioner, furniture etc. have a greater than unitary elastic demand. The reason being that a change in their prices has a greater effect on their demand.
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Elasticity of Demand and Elasticity of Supply
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