Why is the demand for a luxury generally more elastic (or less ...

[Chloeellawright]

Why is the demand for a luxury generally more elastic (or less inelastic) than the demand for a necessity?
 
  What will be an ideal response?

Question 2

Pierre can produce either a combination of 20 bow ties and 30 neckties or a combination of 35 bow ties and 15 neckties. If he now produces 35 bow ties and 15 neckties, what is the opportunity cost of producing an additional 15 neckties?
 
  A) 2 bow ties B) 15 bow ties C) 20 bow ties D) 35 bow ties

[TINA]

Answer to Question 1

Demand for a necessity is generally less elastic than demand for a luxury because there are fewer substitutes for a necessity. Because there are more substitutes for a luxury than a necessity, the elasticity of demand for a luxury is larger is than the elasticity of demand for a necessity.

Answer to Question 2

B