QuestionAugust 4, 2025

Which of the following could explain why the demand for table salt is inelastic? Salt is a luxury for high-income consumers but a necessity for low-income consumers. Households devote a very small portion of their income to salt purchases. Salt is a rare commodity. Salt is a luxury good.

Which of the following could explain why the demand for table salt is inelastic? Salt is a luxury for high-income consumers but a necessity for low-income consumers. Households devote a very small portion of their income to salt purchases. Salt is a rare commodity. Salt is a luxury good.
Which of the following could explain why the demand for table salt is inelastic? Salt is a luxury for high-income consumers but a necessity for low-income consumers. Households devote a very small portion of their income to salt purchases. Salt is a rare commodity. Salt is a luxury good.

Solution
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Answer

Households devote a very small portion of their income to salt purchases. Explanation 1. Identify Characteristics of Inelastic Demand Inelastic demand occurs when the quantity demanded changes little with price changes. This typically happens when a good is a necessity or represents a small portion of income. 2. Analyze Each Option - "Salt is a luxury for high-income consumers but a necessity for low-income consumers": This suggests mixed elasticity, not inelasticity. - "Households devote a very small portion of their income to salt purchases": This supports inelastic demand because price changes have minimal impact on overall spending. - "Salt is a rare commodity": Rarity does not directly imply inelasticity; it affects supply more than demand. - "Salt is a luxury good": Luxury goods usually have elastic demand.

Explanation

1. Identify Characteristics of Inelastic Demand<br /> Inelastic demand occurs when the quantity demanded changes little with price changes. This typically happens when a good is a necessity or represents a small portion of income.<br /><br />2. Analyze Each Option<br /> - "Salt is a luxury for high-income consumers but a necessity for low-income consumers": This suggests mixed elasticity, not inelasticity.<br /> - "Households devote a very small portion of their income to salt purchases": This supports inelastic demand because price changes have minimal impact on overall spending.<br /> - "Salt is a rare commodity": Rarity does not directly imply inelasticity; it affects supply more than demand.<br /> - "Salt is a luxury good": Luxury goods usually have elastic demand.
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