Which of the following correctly ranks their elasticity of demand from the most to least elastic?
Elasticity of demand refers to the responsiveness of consumer demand to changes in price. A more elastic demand means that consumers are highly responsive to price changes, while a less elastic demand indicates a lower level of responsiveness. In this case, the correct ranking can be determined by considering the substitutability of the products and consumer preferences.
The correct ranking of elasticity of demand from the most to least elastic is: Ketchup chips; Potato-based snacks; Potato chips; Lay's ketchup chips.
Ketchup chips have the highest elasticity of demand because they are likely to have more substitutes available in the market. If the price of ketchup chips increases, consumers can easily switch to other flavors or types of chips. Therefore, the demand for ketchup chips is highly sensitive to changes in price.
Potato-based snacks, such as other flavored chips or snacks made from potatoes, come next in the ranking. Although they are also made from potatoes like regular potato chips, the variety in flavors and textures makes them relatively more substitutable. Consumers can easily switch between different potato-based snacks based on their preferences and price changes.
Potato chips, which are the traditional plain salted chips, have a lower elasticity of demand compared to ketchup chips and other potato-based snacks. While they still have some substitutability with other types of snacks, the relatively simpler flavor and limited options make them less elastic.
Lay's ketchup chips, which are a specific brand and flavor of ketchup chips, have the lowest elasticity of demand among the given options. As a branded product, Lay's ketchup chips may have a loyal customer base who specifically prefer this particular brand and flavor. This brand loyalty reduces the substitutability and hence the elasticity of demand.
In summary, the correct ranking of elasticity of demand, from the most to least elastic, is: Ketchup chips; Potato-based snacks; Potato chips; Lay's ketchup chips.
Elasticity of Demand Explanation
Final answer: The elasticity of demand is likely to be most elastic for ketchup chips and least elastic for broader categories like potato-based snacks. Generally, items with closer substitutes, like Lay's ketchup chips and generic ketchup chips, have more elastic demand.
Explanation: In order to correctly rank the elasticity of demand from the most to least elastic between Lay's ketchup chips, ketchup chips in general, potato chips, and potato-based snacks, we would need specific data. However, we can make some educated suppositions based on the typical factors that influence elasticity of demand. Products with closer substitutes (such as generic ketchup chips versus Lay's ketchup chips) generally have more elastic demand, as consumers can easily switch to the substitute product if the price of the first product increases. This suggests that Lay's ketchup chips could have more elastic demand than general ketchup chips. As for potato chips vs. potato-based snacks, while both categories are broad, potato chips fall under the potato-based snacks category, therefore their demand could be considered as less elastic compared to the wider category.
So, based on this preliminary analysis, the potential elasticity ranking from most to least elastic might be: Ketchup chips; Lay's ketchup chips; Potato chips; Potato-based snacks. However, it's important to note that actual market data and consumers' preferences could alter this ranking.