Resource X has many close substitutes, whereas resource Y has no close substitutes. Other things equal, we would expect
A)the demand for resource Y to be more elastic than the demand for resource X.
B)resources X and Y to be close substitutes.
C)resource X to be more expensive than resource Y.
D)the demand for resource X to be more elastic than the demand for resource Y.

Question

Quizplus · Accepted Answer

The presence of close substitutes makes the demand for a resource more elastic because consumers can easily switch to another resource if the price of the original resource increases. Since resource X has many close substitutes and resource Y has none, the demand for resource X would be more elastic than the demand for resource Y.

Resource X Has Many Close Substitutes, Whereas Resource Y Has