Demand tends to be more elastic, the greater the number of good substitutes, the greater the fraction of one's income devoted to a product and the greater the time allowed to respond to a price change.

Question

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This statement is true. When there are more substitutes for a product, consumers are more likely to switch to a different product if the price of one product increases. When the fraction of one's income devoted to a product is high, price changes have a greater impact on a consumer's budget and may lead to a change in consumption. Finally, when consumers have more time to respond to price changes, they can take the time to research their options and make decisions that best fit their budget and preferences. All of these factors contribute to greater price sensitivity, or elasticity, of demand.

Demand Tends to Be More Elastic, the Greater the Number