Q.Complete the correlation:
Salt : Essential good : : Diamond : ______

Salt : Essential good :: Diamond : Luxury good.

Goods are classified by their nature into necessities and luxuries, and this nature is a key factor deciding elasticity of demand.

• Salt is an essential good (necessity) — consumed by everyone for daily living, so its demand is fairly inelastic. …

The statement is True.

Demand for luxurious goods is elastic. Luxuries are not essential, their purchase can be postponed, and they usually claim a large part of income, so even a small rise in price causes a more-than-proportionate fall in quantity d …