If a good has many close substitutes, it is likely that the _____.
A) price elasticity of the good is highly inelastic
B) demand curve for the good is upward sloping
C) quantity demanded of the good is very sensitive to changes in price
D) demand for the good will increase in proportion to an increase in income

Question

Quizplus · Accepted Answer

When a good has many close substitutes, consumers can easily switch to other products if the price of the good increases, making the quantity demanded very sensitive to changes in price. This is the definition of price elasticity, where a good with many substitutes is considered to have a high price elasticity of demand.

If a Good Has Many Close Substitutes, It Is Likely