Is the demand for a luxury generally more elastic (or less inelastic)than the demand for a necessity? Why? Demand for a luxury is more __ than demand for a necessity because a luxury has __ substitutes. A. inelastic; more B. elastic; more C. elastic; fewer D. inelastic; fewer

## Step 1<br />The problem is asking us to compare the elasticity of demand between a luxury and a necessity. Elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in its price. <br /><br />## Step 2<br />A luxury is a good that is not essential and can be easily replaced by other goods. This means that if the price of a luxury increases, consumers can easily switch to other goods, which makes the demand for a luxury elastic.<br /><br />## Step 3<br />On the other hand, a necessity is a good that is essential and has few or no substitutes. This means that even if the price of a necessity increases, consumers will still need to buy it, which makes the demand for a necessity inelastic.