Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.
A) not comparable to
B) greater than
C) less than
D) the same as

Question

Quizplus · Accepted Answer

The price elasticity of demand for a product measures the responsiveness of quantity demanded to changes in price. The more close substitutes a product has, the more elastic its demand will be. This is because consumers can easily switch to other products if the price of one product increases. Therefore, Pizza Hut pizza, which has more close substitutes than food in general, will have a greater price elasticity of demand than food in general.

Pizza Hut Pizza Has More Close Substitutes Than Does Food