Question

Which statement correctly describes the relationship between postponement and price elasticity?

Options

• Postponable purchases have inelastic demand, while non-postponable purchases have elastic demand.

• Postponable purchases have elastic demand, while non-postponable purchases have inelastic demand.

• All purchases have the same elasticity regardless of postponement.

• Postponement increases all demand equally.

Answer 1

Postponable purchases have elastic demand, while non-postponable purchases have inelastic demand.

Explanation:

Postponable goods can be delayed if prices rise, making demand elastic. Essential purchases cannot be delayed, making demand inelastic.