The fundamental determinant of the elasticity of demand is:
A) how quickly per-unit costs increase with an increase in production.
B) tastes and preferences.
C) population.
D) the number and closeness of substitutes.

Question

Quizplus · Accepted Answer

The number and closeness of substitutes is a key factor in determining the elasticity of demand. Consumers are more likely to switch to a substitute product if the price of their preferred product increases, indicating a more elastic demand. Alternatively, if there are few or no substitutes, consumers may be willing to pay a higher price, indicating a more inelastic demand.

The Fundamental Determinant of the Elasticity of Demand Is