Demand for a product is likely to be more price elastic if
A) it is considered a necessity.
B) it has many substitutes.
C) it has few substitutes.
D) it requires a small cash outlay.
E) none of the above is true.

Question

Quizplus · Accepted Answer

When a product has many substitutes, consumers have more options to choose from, which makes them more sensitive to price changes. As a result, a small change in the price of such a product is likely to have a larger impact on demand, making it more price elastic. This is in contrast to a product with few substitutes, which consumers may perceive as essential or unique, and therefore may be willing to pay a higher price for it, making it less price elastic.

Demand for a Product Is Likely to Be More Price