A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?

(A) Diamond necklace

(B) Amputation procedures for diabetes sufferers

Answer: The correct answer is " (B) Amputation procedures for diabetes sufferers".

The price elasticity of demand measures the degree of response of the quantity demanded of a good, given the change in the price of that good.

The demand for a good or service is less elastic when, given a change in the price, the demand varies in a smaller amount and the demand for a good or service is more elastic when, before a change in the price, the demand varies by greater or equal. Quantity than the price.

Between a diamond necklace and amputation procedures for patients with diabetes it is clear that the demand for amputation procedures for patients with diabetes is less elastic than that of a diamond necklace, since being a consequence of a disease and being treated of the health of the people the demand varies little or very little before a change in the price. On the other hand, a diamond necklace is a luxurious asset, which is not of extreme necessity for people.