A shoe producing firm decides to acquire a firm that produces shoe laces.This implies that
A)The firm's aggregate demand will be less elastic than the individual demand
B)The firm's aggregate demand will be more elastic than the individual demand
C)The firm's aggregate demand will be of the same elasticity as the individual demand
D)None of the above

Question

Quizplus · Accepted Answer

Acquiring a firm that produces shoe laces will lead to an increase in the firm's product offerings and may attract a wider range of customers. This will increase the firm's aggregate demand elasticity as consumers have more choices and substitutes. Therefore, the firm's aggregate demand will be more elastic than the individual demand.

A Shoe Producing Firm Decides to Acquire a Firm That