Suppose that technological breakthroughs make jet packs affordable, convenient, and safe for personal transportation. The demand for automobiles would become _____ the consumer surplus from automobiles.
A) more price elastic, decreasing
B) more price inelastic, increasing
C) more price inelastic, decreasing
D) perfectly inelastic, increasing

Question

Quizplus · Accepted Answer

With the introduction of jet packs as a viable alternative to automobiles, consumers would have more transportation options, making them more sensitive to changes in the price of automobiles. This increased sensitivity to price changes makes the demand for automobiles more price elastic. As consumers switch to using jet packs, the value they derive from automobiles decreases, leading to a decrease in consumer surplus for automobiles.

Suppose That Technological Breakthroughs Make Jet Packs Affordable, Convenient, and Safe