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Tell me about Price Elasticity
Can someone pls help with eco 3a? [14:32, 10/29/2016] Write abt price elasticity of demand What are the essential commodities & non essential ones? [14:44, 10/29/2016] the ones which have less than 1 are essential and the ones which have PE > 1 are non essentials
I think that "Essential commodities" are ones that have very low elasticity in demand in relation to price (assuming presence of substitutes)
example - rice,wheat ...... substitutes would be jowar, baJra etc,
Is this correct ?
Yes you are correct. doesnt matter if that is rice or wheat - PE should be less than 1.
Go by price elasticity. Commodities with low elasticity are essential. Commodities with high price elasticity are non essential.
Bread and potatoes are essential in this case. Cheese, peas and meat are not essential.