ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Perfectly Price Inelastic
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Price Inelastic
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Perfectly Price Elastic
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Price Elastic
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Detailed explanation-1: -If it’s easy to find a substitute product when the price of a product increases, the demand will be more elastic. If there are few or no alternatives, demand will be less elastic.
Detailed explanation-2: -The correct answer is a demand would tend to be priced and elastic. The substitute goods are determinants of elasticity as a decrease in the substitutes decreases the elasticity. So if there are less substitutes, that means the demand isn’t elastic to the change in price.
Detailed explanation-3: -If a product has got very few substitutes, then the price elasticity of that product will be inelastic because a slight change in their price will cause a large change in the quantity demanded of that product.
Detailed explanation-4: -When there are few substitutes available for a good, demand tends to be relatively inelastic.