Which of the following is most likely to be a characteristic of a product with elastic demand?
A) The amount spent on the product is a relatively large percentage of consumer's income.
B) There are very few substitutes for the product.
C) There is a short time period under consideration.
D) The product is considered a necessity.
E) There are a small number of competitors from which to purchase the product.

Question

Quizplus · Accepted Answer

When a product has elastic demand, this means that changes in the price of the product will have a significant impact on the quantity demanded by consumers. In such cases, products that are a relatively large percentage of a consumer's income are likely to have more elastic demand. This is because any change in price will have a greater impact on the consumer's budget and therefore have a stronger effect on their purchasing decisions.

Which of the Following Is Most Likely to Be a Characteristic