The Elasticity of Demand for Perishable Goods

The elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to changes in its price. The elasticity of demand for perishable goods such as milk, vegetables, and fruits is generally relatively inelastic, which means that the quantity demanded does not change significantly when the price changes.

Reasons for Relatively Inelastic Demand for Perishable Goods

1. Necessity: Perishable goods are often considered essential items that consumers need to buy regardless of the price. For example, people need to buy milk, fruits, and vegetables to meet their nutritional needs.

2. Limited Substitutes: Perishable goods often have limited substitutes, especially in the short term. For example, if the price of milk increases, consumers may not be able to switch to other beverages like juice or soda immediately.

3. Time Constraint: Perishable goods have a limited shelf life, and consumers need to consume them before they spoil. Therefore, consumers may not have the luxury of waiting for the price to decrease before making a purchase.

Implications of Relatively Inelastic Demand for Perishable Goods

1. Price Changes: Producers of perishable goods have limited flexibility in increasing or decreasing prices because it may not significantly affect the quantity demanded.

2. Supply Chain Management: Producers of perishable goods need to manage their supply chain efficiently to reduce spoilage and waste. They need to ensure that the right quantity of goods is produced, transported, and stored to meet consumer demand.

Conclusion

In conclusion, the elasticity of demand for perishable goods is generally relatively inelastic due to their necessity, limited substitutes, and time constraint. This has implications for pricing and supply chain management for producers of perishable goods.

As milk and vegetables are perishable in nature...
The price of milk and vegetables changes but demand for it remains the same...
Hence option C) is correct