Which of the following situations could explain why product X has a relatively high price elasticity of demand in the short run?
A)the price of product X is too low
B)the price of product X is too high
C)the prices of substitute products are constant
D)there are many substitutes for product X and consumers have an ability to switch quickly to those substitutes
E)there are few substitutes for product X in the short run

Question

Quizplus · Accepted Answer

If there are many substitutes for product X and consumers have an ability to switch quickly to those substitutes, then the price elasticity of demand for product X will be relatively high in the short run. This means that a small change in the price of product X will cause a proportionally larger change in the quantity demanded.

Which of the Following Situations Could Explain Why Product X