Blessy and Jerry are friend they were discussing, how demand for salt with various circumstances
What will happen cross elasticity of salt and income elasticity?
What will happen price elasticity??
Dear student,
The items which are necessity have inelastic demand and salt is one of them also there are no good substitutes of it. Salt represents a small proportion of most people's budget.
1) Cross elasticity measures the responsiveness in the quantity demanded of one good when the price of another good changes. Since the demand of salt is inelastic, hence, change in price of other goods will not affect its demand.
Since salt represents a small proportion of most people's budget and there is no substitute of it and a necessity item, change in income will not have a major impact on its demand.
2) As discussed above, the demand of salt is price inelastic.
Regards
The items which are necessity have inelastic demand and salt is one of them also there are no good substitutes of it. Salt represents a small proportion of most people's budget.
1) Cross elasticity measures the responsiveness in the quantity demanded of one good when the price of another good changes. Since the demand of salt is inelastic, hence, change in price of other goods will not affect its demand.
Since salt represents a small proportion of most people's budget and there is no substitute of it and a necessity item, change in income will not have a major impact on its demand.
2) As discussed above, the demand of salt is price inelastic.
Regards