If a good has a price-inelastic demand,then which statement is NOT likely to be characteristic of this good?
A)It is a necessity and is relatively small proportion of the household budget.
B)It has many substitutes.
C)Consumers spend a small percentage of their income on it.
D)Consumers do not have much time to adjust to market changes.

Question

Quizplus · Accepted Answer

If a good has a price-inelastic demand, it means that changes in price have little effect on the quantity demanded. Therefore, consumers are less likely to switch to substitutes if the price of the good increases. This implies that the good has few substitutes available.

If a Good Has a Price-Inelastic Demand,then Which Statement Is