Discuss the relevant elasticity for two of the following scenarios in separate p

Question

Discuss the relevant elasticity for two of the following scenarios in separate posts. Consider the demand for gasoline. When the price of gasoline increases by a relatively large amount, the quantity of gasoline purchased falls by a relatively small amount.Consider the market for cigarettes. When a 200% tax is imposed on the consumers of cigarettes, quantity demanded falls by 60%.Consider the demand for children. People who have higher incomes have fewer children on average. People with lower incomes have more children on average.Consider the market for soap. How would you determine if soap and shampoo are competitors?

Explanation / Answer

Gasoline: Since, gasoline is a necessity, therefore the drop in its quantity is very less as mentioned.

Cigarette: Since cigarette is not a necessity, so we observed a considerable drop its quantity, i.e., 60%.

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