Task 2: Elasticity Which product would of demand in alsolute value? Explain your

Question

Task 2: Elasticity Which product would of demand in alsolute value? Explain your answer Including L Consider the blewisg two productE 3Dtelevalon and have a higher price elastikclty in aoluteves dentifying the determinant of elasiy(1 mark-Maxinum mumber of wonds 0 2. Conaider the folowing two products: Cofee sold in a café or electricity (assume eds capacity). Which product would have a higher price elastikity of supply in abeolute value? Explain your answer Indluding identying the determinant of elastcity. Cofflee sold in a cafe or electricty (assume limited exesscapacityl( marklmam number of words 0 n the fellawing graph, the demand for tyres has ahifted to the left because the price of car has increased from, on average $25,000 to $35,000 per car, Use the gragh to answer question o, $90 Caltulate the oo" price .lateity of de and betwees tyres and carl gew your cakulations and expiain your answer in words(2 mark)-Maximum number of words 80calculation

Explanation / Answer

(1)

3D television is a luxury good which comprises a higher proportion of the consumer’s total budget. On the other hand, prescription (for medicines) is a life-saving necessity good, which comprises relatively lower proportion of the consumer’s budget (assuming the prescription is not for critical high-cost diseases). Therefore, demand for 3D television will have higher price elasticity of demand.

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