The internet has made it easy for consumers to buy books online. As a result, many traditional booksellers like Barnes & Noble and Borders (starting in 2008) along with Amazon sell books on their websites. What effect will the internet have on the demand curve that any bookstore faces?
A) The price elasticity of demand will remain unchanged; only the cross -price elasticity will change.
B) The demand facing a bookstore will become more inelastic.
C) The demand facing a bookstore will become horizontal.
D) The demand facing a bookstore will become more elastic.

Question

Quizplus · Accepted Answer

The internet increases the availability of substitutes and comparison shopping, making consumers more price-sensitive. This sensitivity to price changes makes the demand curve facing a bookstore more elastic, as consumers can easily find alternatives online.

The Internet Has Made It Easy for Consumers to Buy