Demand tends to be more price inelastic when few substitutes for a product exist.

Question

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When few substitutes for a product exist, consumers have limited options, making them less responsive to changes in price. This leads to a more inelastic demand, where demand does not fluctuate significantly in response to price changes. When there are few substitutes available for a product, consumers have limited options to choose from, making them less sensitive to price changes. As a result, demand becomes more price inelastic, meaning that changes in price have a relatively small impact on the quantity demanded.

Demand Tends to Be More Price Inelastic When Few Substitutes