The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that
A) Cheerios are a luxury.
B) Cereals are a necessity.
C) there are more substitutes for Cheerios than for cereals as a whole.
D) consumption of cereals as a whole is greater than consumption of Cheerios.

Question

Quizplus · Accepted Answer

The more substitutes available for a product, the more price-elastic its demand tends to be. Since there are more substitutes for Cheerios (such as other brands of cereal or other breakfast foods), its demand is more price-elastic compared to cereals as a whole.

The Demand for Cheerios Cereal Is More Price-Elastic Than the Demand