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: -Elastic goods typically have lots of substitutes. They are often luxury items, services or plans. Some products with elastic demand, like foods or toiletries, make the list because of the number of options available. For example, if the cost of one deodorant brand goes up, consumers are likely to switch brands.

Detailed explanation-3: -Answer and Explanation: “A good with many close substitutes is likely to have relatively elastic demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises."

Detailed explanation-4: -Elastic demand occurs when the price of a good or service affects consumer demand. If the price goes down just a little, consumers will buy a lot more. If prices rise just a bit, they’ll stop buying as much and wait for prices to return to normal.

Detailed explanation-5: -We determine whether goods are complements or substitutes based on cross price elasticity-if the cross price elasticity is positive the goods are substitutes, and if the cross price elasticity are negative the goods are complements.