The price elasticity of demand for a good such as water is likely to be very low because:
A)the price is a small percentage of most budgets.
B)water has some good substitutes.
C)water is considered a luxury.
D)the share of income spent on water is large.

Question

Quizplus · Accepted Answer

Water is a necessity and is essential for survival, which means consumers are likely to continue purchasing water even if there is a price increase. Additionally, the price of water is usually a small percentage of most budgets, further reducing the price elasticity of demand for this good.

The Price Elasticity of Demand for a Good Such as Water