What type of goods have a price elasticity of demand that is inelastic?Luxury goods.Necessities.Substitute goods.Complementary goods

1. Break Down the Problem

The question asks which type of goods have an inelastic price elasticity of demand. We need to understand the definitions of the categories of goods mentioned: luxury goods, necessities, substitute goods, and complementary goods.

2. Relevant Concepts

• Price Elasticity of Demand (PED) measures how much the quantity demanded of a good responds to a change in price.
• Inelastic Demand occurs when the quantity demanded changes only slightly with a change in price, typically having a PED of less than 1.

3. Analysis and Detail

1. Luxury Goods: These are non-essential items that consumers typically do not purchase in response to price changes, often having more elastic demand.
2. Necessities: These are essential goods for survival (e.g., food, water, basic clothing) and have inelastic demand since consumers will buy them regardless of price changes.
3. Substitute Goods: These are goods that can replace each other. Demand for substitutes is more elastic since a price increase in one can lead consumers to switch to the alternative.
4. Complementary Goods: These are goods that are often used together (e.g., printers and ink). The demand for complementary goods can vary; however, they don't typically exhibit purely inelastic demand.

4. Verify and Summarize

Among the categories analyzed, necessities are the type of goods that typically exhibit inelastic demand because consumers need these goods, and their demand does not significantly decrease with rising prices.

Final Answer

Necessities have a price elasticity of demand that is inelastic.