ECONOMICS
DEMAND
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -The longer the adjustment period, the greater the consumers’ ability to substitute relatively higher-priced products with lower-priced substitutes. Demand for cigarettes among teenage smokers is less elastic than that of adult smokers. Elasticity of demand values are sorted into four categories.
Detailed explanation-2: -A decrease in the price of substitute goods leads to an decrease in the demand for given commodity and vice versa. Eg., if price of a substitute good (say coffee) decreases, then demand for given commodity (say tea) will fall, so demand for a given commodity is directly affected by change in price of substitute goods.
Detailed explanation-3: -The demand for a good increases, if the price of one of its substitutes rises. The demand for a good decreases, if the price of one of its substitutes falls. A good that is consumed with another good.
Detailed explanation-4: -The substitution effect occurs when consumers react to an increase in a good’s price by consuming less of that good and more of other goods.