Question

What effect do habitual consumption patterns have on price elasticity of demand?

Options

• Habitual goods have elastic demand because consumers always buy them.

• Habitual goods have inelastic demand because consumers continue purchasing them despite price changes.

• Habits do not influence price elasticity at all.

• Habitual goods always become cheaper.

Answer 1

Habitual goods have inelastic demand because consumers continue purchasing them despite price changes.

Explanation:

Consumers continue buying habitual goods despite price increases, resulting in inelastic demand.