How does the existence of substitutes affect the price elasticity of demand?Question 1Answera.The existence of substitutes leads to higher prices in the marketplace.b.The existence of substitutes leads to a situation with perfect elasticity.c.If there are many substitutes, the price elasticity of the good will be more elastic than otherwise.d.None of these answers are correct.
Question
How does the existence of substitutes affect the price elasticity of demand?Question 1Answera.The existence of substitutes leads to higher prices in the marketplace.b.The existence of substitutes leads to a situation with perfect elasticity.c.If there are many substitutes, the price elasticity of the good will be more elastic than otherwise.d.None of these answers are correct.
Solution
The correct answer is c. If there are many substitutes, the price elasticity of the good will be more elastic than otherwise.
Here's why: Price elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. If a good has many substitutes, consumers can easily switch to another product if the price of the good increases. This means that the quantity demanded of the good is highly responsive to changes in its price, making the good more price elastic. Conversely, if a good has few substitutes, consumers have fewer options to switch to if the price of the good increases, making the good less price elastic.
Similar Questions
Page(s) 117-1184.1. What is the price elasticity of demand, and what are its determinants?How does the existence of substitutes for a product affect the product’s price elasticity of demand?The existence of substitutes leads to higher prices in the marketplace.If there are many substitutes, the price elasticity of the good will be elastic.The existence of substitutes leads to a situation with perfect elasticity.The existence of substitutes makes the price elasticity of demand inelastic.
Which of the following best describes the relationship between the elasticity of demand and the availability of substitutes? A. The elasticity of demand will increase as the availability of substitutes decreases. B. The elasticity of demand will decrease as the availability of substitutes remains constant. C. The elasticity of demand will increase as the availability of substitutes increases. D. The elasticity of demand will remain constant as the availability of substitutes decrease.
The price elasticity of a demand for a good:A.can vary from person to person.B.can be affected by the number of substitutes.C.can change over time.D.depends on the proportion of income the good requires in order to be purchased.E.All of the above
If two products are substitutes, then the: Group of answer choices 1.cross-price elasticity of demand between them will be positive. 2.cross-price elasticity of demand between them will be negative. 3.price elasticity of demand for both will be positive. 4.income elasticity of demand for both will be high.
The cross price elasticity of demand for substitutes goods is:Question 9Select one:a.negative.b.positive.c.equal to 1.d.positive only for normal goods.
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