The narrower the definition of a product,
A)the larger the number of substitutes and the greater the price elasticity of demand.
B)the smaller the number of substitutes and the greater the price elasticity of demand.
C)the larger the number of substitutes and the smaller the price elasticity of demand.
D)the smaller the number of substitutes and the smaller the price elasticity of demand.

Question

Quizplus · Accepted Answer

When a product is defined narrowly, it is seen as more unique, leading to a larger number of perceived substitutes. This increases the price elasticity of demand, as consumers can more easily switch to alternatives if the price of the product increases.

The Narrower the Definition of a Product