Answer to Question #146438 in Microeconomics for Ryma

Question

In the context of Pakistan’s society for each of the following products, indicate the correct type of price elasticity of demand or supply and also justify your answer:
a) An exquisite painting to be sold at an auction (1 Mark)
b) Demand for Cancer-treating drug (1mark)
c) Production of gold mining (1 mark)
d) Demand for gold (1 mark)

Answer 1

a) An exquisite painting to be sold at an auction.

it is perfectly in elastic demand,because any change in the price of an exquisite painting doesn't affect the demand of it, the demand remains constant irrespective of the change in the price.

b) Demand for Cancer-treating drug.

The demand for cancer-treating drug is inelastic,since the relative change in quantity demanded is always less than the relative change in the drug price.

c) Production of gold mining.

The price elasticity for gold in Pakistan is inelastic,even with the production of gold mining in Pakistan the raw materials available remains limited.

d) Demand for gold.

It has a positive price elasticity since the the value of gold increase along with the demand of gold.