In the context of price elasticity of demand, which of the following scenarios best illustrates a unitary elastic demand, particularly when contrasting necessity and luxury goods?

Unitary elastic demand means a 1 % change in price produces a 1 % change in quantity demanded. In practice this is most visible for a luxury item that people can easily replace or skip. For example, if a designer handbag’s price rises 10 %, buyers cut back on purchases by exactly 10 %, showing the quantity change matches the price change. In contrast, a necessity such as milk would see a much smaller drop in quantity when its price rises, because people still need it. Thus, a luxury good that reacts proportionally to price changes best illustrates unitary elasticity.