Which of the following would cause a demand curve for a good to be price inelastic? a. There are a great number of substitutes for the good. b. The good is a necessity. c. The good is a luxury. d. The good is inferior.
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A demand curve for a good would be price inelastic if the good is considered a necessity. Necessities, such as basic food items, medicine, or fuel, are essential for daily living, meaning that consumers will purchase them regardless of price changes. This steadiness in demand, even when prices rise, results in a steep demand curve. Additionally, when considering why necessities tend to be price inelastic, it's interesting to note that consumers often adjust their budgets to accommodate essential items. This means they may cut back on non-essential spending first, further demonstrating the strong demand for necessary goods, which remains relatively constant despite price fluctuations.