Identify the truthfulness of the following statements. I. Demand tends to be more price inelastic when few substitutes for a product exist.
II) Demand tends to be more price elastic when a consumer's expenditure on the product is small.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Question

Quizplus · Accepted Answer

Demand is more price inelastic when there are few substitutes because consumers have fewer alternatives. However, demand is more price elastic when a consumer's expenditure on the product is large, not small, as they are more sensitive to price changes.

Identify the Truthfulness of the Following Statements