When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good ________ and ________.
A)is a necessity; has poor substitutes
B)has poor substitutes; is a luxury
C)is a necessity; has good substitutes
D)is a luxury; is narrowly defined
E)is a luxury; has experienced a recent price change

Question

Quizplus · Accepted Answer

The good is likely a necessity with poor substitutes because the quantity demanded decreased by a smaller percentage than the price increased, indicating inelastic demand.

When the Price of a Good Increased by 6 Percent