The price elasticity of demand for a product tends to be greater the
A) more close substitutes for it there are.
B) fewer close substitutes for it there are.
C) lower its price.
D) more broadly the product is defined.
E) shorter the time span being considered.

Question

Quizplus · Accepted Answer

When there are more close substitutes for a product, consumers have more options to choose from and may switch to a substitute if the price of the original product increases. This makes the demand for the original product more elastic, meaning that a change in price will result in a larger change in demand.

The Price Elasticity of Demand for a Product Tends to Be