Assume an analyst has been hired to estimate the price elasticity of demand for Levi's brand blue jeans and for blue jeans in general.Ceteris paribus,we would expect the price elasticity of demand in absolute value to be:
A)larger for Levi's brand blue jeans than for blue jeans in general.
B)larger for blue jeans in general than for Levi's brand blue jeans.
C)approximately the same for both Levi's brand blue jeans and blue jeans in general.
D)none of the above because the market for blue jeans cannot be analyzed using the model of supply and demand.

Question

Quizplus · Accepted Answer

Levi's brand blue jeans are likely to have more of a cult following and brand loyalty than blue jeans in general, meaning that consumers of Levi's brand blue jeans may be willing to pay a higher price for the specific brand they prefer, resulting in a lower price elasticity of demand. In contrast, the demand for blue jeans in general may be more sensitive to changes in price, leading to a higher price elasticity of demand.

Assume an Analyst Has Been Hired to Estimate the Price