Which of the following statements is correct?
A) The larger the proportion of income spent on a good, the smaller the elasticity of demand.
B) The demand for New Balance shoes is more elastic than the demand for shoes in general.
C) The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good.
D) The demand for luxuries is less elastic than the demand for necessities.
E) The demand for salt is very elastic.

Question

Quizplus · Accepted Answer

The demand for a specific brand (like New Balance shoes) is more elastic than the demand for a broader category (like shoes in general) because consumers can more easily find substitutes within the broader category.

Which of the Following Statements Is Correct