If both matches and automobile prices increase by 10 percent, consumers will likely buy
A)fewer matches and approximately the same quantity of automobiles.
B)approximately the same quantity of matches and fewer automobiles.
C)fewer matches and fewer automobiles.
D)approximately the same quantity of both matches and automobiles.

Question

Quizplus · Accepted Answer

Matches are generally considered a necessity with a low price elasticity of demand, meaning consumers will buy about the same quantity even if the price increases. Automobiles, being more expensive and not an immediate necessity, have a higher price elasticity of demand, so consumers are likely to buy fewer when prices increase.

If Both Matches and Automobile Prices Increase by 10 Percent