Question

In general, a "big ticket item" such as a house or new car will

a. tend to have an inelastic demand because it has many substitutes.
b. tend to have a more elastic demand than a lower-priced good.
c. tend to have a more inelastic demand the more time that passes.
d. tend to have an inelastic demand because spending on the item takes up a large share of the average consumer's budget.

Answer 1

Answer: In general, a "big ticket item" such as a house or new car will tend to have a more elastic demand than a lower-priced good.

Explanation: In "big ticket item" when price changes the quantity demanded will also change in accordance with it, thereby stating that the the commodities have elastic demand whereas the scenario is different with low-priced good.

Therefore, the correct option is (b)