micro doubts..

[SoniaKapoor]

 Q1 Which object has a lowest elasticity of supply?
a) Luxury items
b) Necessities
c) Perishable goods
d) None of the above

 Q2 If both income and substitution-effects are strong, this region of the demand curve
must be
a) relatively price elastic
b) relatively price inelastic
c) perfectly inelastic
d) unit elastic

[Homer Simpson]

1(c), 2(a)

[Granpa Simpson]

Tsuki..yes Perishable goods is the answer..thanx Tsuki..:)

[SoniaKapoor]

Thanxx ...even i thought for q1 as perishable..:)

[Homer Simpson]

yep and your logic for 1 is fine :) what about 2? i reckon that strong income and substitution effects together usually mean that price change (fall/rise) will have "strong" opposite effect on quantity. In that sense, it should be "relatively elastic"

[The Villain]

Yes Tsuki quest 2 is price elastic.

[Homer Simpson]

ok, thanks Ron :)

[tkt]

hey can you explain in detail the intution behind these answers especially the second one

[kangkan]

Hi...question 2 will depend on wether the good is normal or inferior right?