If a factor of production has many close substitutes, we would expect that its price elasticity of demand would be
A)unity.
B)zero.
C)greater than one.
D)less than one, but greater than zero.

Question

Quizplus · Accepted Answer

When a factor of production has many close substitutes, its price elasticity of demand is expected to be greater than one. This is because consumers can easily switch to substitutes if the price of the factor increases, making the demand for that factor highly responsive to price changes.

If a Factor of Production Has Many Close Substitutes, We