Resource X has many close substitutes, whereas resource Y has no close substitutes. Other things equal, we would expect
A) the demand for resource Y to be more elastic than the demand for resource X.
B) resources X and Y to be close substitutes.
C) resource X to be more expensive than resource Y.
D) the demand for resource X to be more elastic than the demand for resource Y.

Question

Quizplus · Accepted Answer

When a resource has close substitutes, consumers have more options to switch to in case there is a change in the price of that resource. Therefore, the demand for resource X (which has many close substitutes) is expected to be more elastic than the demand for resource Y (which has no close substitutes). Hence, the answer is D.

Resource X Has Many Close Substitutes, Whereas Resource Y Has