Products with many close substitutes tend to have _____ demand, and products considered luxury goods tend to have _____ demand.
A) elastic; elastic
B) elastic; inelastic
C) inelastic; elastic
D) inelastic; inelastic

Question

Quizplus · Accepted Answer

Products with many close substitutes tend to have elastic demand because consumers can easily switch to another product if the price of one product increases. Luxury goods also tend to have elastic demand because they are not necessities, and consumers can refrain from buying them if their prices go up.

Products with Many Close Substitutes Tend to Have _____ Demand