ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The availability of alternatives or substitute goods can affect demand elasticity. 1 Hence, the demand for goods or services with many substitutes is highly price elastic; a small increase in the price levels of goods causes consumers to buy its substitutes.

Detailed explanation-2: -The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases.

Detailed explanation-3: -It means that a small rise in the price of the good would cause a greater fall in its quantity demanded as the buyers would switch to its substitutes. Hence, the demand for a product is more price elastic if more substitutes are available in the market.

Detailed explanation-4: -An elastic good is defined as one where a change in price leads to a significant shift in demand and where substitutes are available for an item, the more elastic the good will be.

Detailed explanation-5: -The price elasticity of demand for a good or service will be greater in absolute value if many close substitutes are available for it. If there are lots of substitutes for a particular good or service, then it is easy for consumers to switch to those substitutes when there is a price increase for that good or service.