Which of the following statements about price elasticity of demand is most accurate?
A)The more substitutes a product has,the more likely it is to be price elastic.
B)All products show some price inelasticity.
C)Nondiscretionary (necessary)purchases are price elastic.
D)With inelastic demand,reducing price has a very large impact on revenues.
E)With inelastic demand,manufacturers change prices frequently to capitalize on consumer behavior.

Question

Quizplus · Accepted Answer

The more substitutes a product or service has,the more likely it is to be price elastic.For example,a new sweater,shirt,or blouse has many possible substitutes and is price elastic,but gasoline has almost no substitutes and is price inelastic.Products and services considered to be nondiscretionary are price inelastic,so open-heart surgery is price inelastic,whereas airline tickets for a vacation are price elastic.

Which of the Following Statements About Price Elasticity of Demand