The price elasticity of demand coefficient for a good will be lower:
A) if there are few substitutes for the good.
B) if expenditure on it is a small part of one's budget.
C) both a and b are true.
D) neither a nor b are true.

Question

Quizplus · Accepted Answer

The price elasticity of demand is lower (more inelastic) when there are few substitutes for the good and when the expenditure on the good is a small part of one's budget. Both conditions make consumers less responsive to price changes.

The Price Elasticity of Demand Coefficient for a Good Will