When the major component of an item experiences a price increase, the demand for the item may become more elastic.

Question

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If the major component of an item experiences a price increase, it may make the item more expensive overall, and therefore reduce the quantity demanded by consumers. In this case, the demand for the item becomes more elastic, meaning that small changes in price are more likely to have a larger impact on the quantity demanded. This can be especially true if there are many substitute goods available, which consumers can switch to if the price of the original item becomes too high.

When the Major Component of an Item Experiences a Price