Question : The concept of elasticity is not applicable to:
Option 1: Necessities.
Option 2: Luxuries.
Option 3: Unique goods.
Option 4: All goods have an elasticity measure.
Correct Answer: Unique goods.
Solution : The correct answer is (c) Unique goods.
The concept of elasticity is not equally applicable to all goods. While elasticity can be calculated for most goods, the practical usefulness and interpretation of elasticity can vary depending on the characteristics of the good in question.
For goods that are considered necessities, such as basic food items or essential medical supplies, the demand is often less responsive to price changes, resulting in a relatively inelastic demand. On the other hand, goods that are considered luxuries or have readily available substitutes tend to have more elastic demand, meaning that consumers are more sensitive to changes in price.
There are also unique goods or goods with limited substitutes, such as rare artwork or collector's items, where the concept of elasticity may not provide meaningful insights due to the scarcity and unique nature of these goods.
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