The demand for a specific brand of corn flakes cereal is likely to be:
A) very price elastic, because there are many close substitutes available.
B) less price elastic, because there are many close substitutes available.
C) very price elastic, because that specific brand is a unique product.
D) less price elastic, because the specific brand is a unique product.

Question

Quizplus · Accepted Answer

The presence of close substitutes is an indication of price elasticity. When there are alternatives available, consumers can easily switch to other options if the price of a particular brand increases. This makes the demand for a specific brand of corn flakes cereal very price elastic.

The Demand for a Specific Brand of Corn Flakes Cereal