When the price of milk goes up, demand does not fall significantly, because people still need to buy milk. However, if the price of T-bone steaks rises beyond a certain point, people will buy fewer of them because they can turn to the many substitutes for this cut of meat. This demonstrates price elasticity of demand.

Question

Quizplus · Accepted Answer

This statement accurately describes price elasticity of demand. When a good has many substitutes, consumers are more likely to switch to an alternative if the price becomes too high, making demand more elastic.

When the Price of Milk Goes Up, Demand Does Not