Compare the demand for water with the demand for wine. The demand for water is likely A. relatively more inelastic because water is a luxury. B. relatively more elastic because water is a luxury. C. relatively more elastic because water is a necessity. D. relatively more inelastic because water is a necessity. E. equally elastic as the demand for wine.

The demand for water is likely relatively more inelastic because it is a necessity for survival. Unlike wine, which is considered a luxury and has more flexible demand, people need water to live, making them less sensitive to price changes in the short term. So, even if the price of water increases, people will still need to purchase it, leading to a less elastic demand curve. On the other hand, the demand for wine is typically more elastic because it is not essential for survival. People can easily reduce their wine consumption or switch to other beverages if prices rise. As a luxury item, consumers have the freedom to make choices based on price, leading to greater sensitivity to changes in demand when prices fluctuate.