Which of the following statements would you expect to be true about the demand elasticities for cornflakes and food?
A) Compared with food, cornflakes has a lower price elasticity of demand because it is specifically defined.
B) Food has a lower price elasticity of demand than cornflakes because it is more broadly defined.
C) Food has a higher price elasticity of demand because it is a necessity.
D) Because cornflakes is food, cornflakes would have the same price elasticity of demand as food.
E) Because cornflakes is food, but not all food is cornflakes, cornflakes would have a lower price elasticity of demand.

Question

Quizplus · Accepted Answer

Food is a more broadly defined category than cornflakes, and therefore encompasses more substitutes and options. As a result, consumers are more likely to switch to other food options if the price of a particular food rises, making food as a category more price elastic than cornflakes specifically.

Which of the Following Statements Would You Expect to Be