A product is likely to have a price elasticity of demand that exceeds 1 when
A) its price falls.
B) the percentage of income spent on it decreases.
C) it is a necessity.
D) it has close substitutes.

Question

Quizplus · Accepted Answer

When a product has close substitutes, consumers can easily switch to alternatives if the price rises, making the demand more elastic (price elasticity of demand greater than 1).

A Product Is Likely to Have a Price Elasticity of Demand