Table 6-2

-Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement.
A) The demand for Coca-Cola is inelastic.
B) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represents goods that are more necessity than luxury.
C) The difference in elasticity values is explained by the fact that the more narrowly we define a market, the more elastic the demand will be.
D) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks."

Question

Table 6-2
 
-Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement.
A) The demand for Coca-Cola is inelastic. 
B) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represents goods that are more necessity than luxury. 
C) The difference in elasticity values is explained by the fact that the more narrowly we define a market, the more elastic the demand will be. 
D) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks."

Quizplus · Accepted Answer

The more narrowly a market is defined, the more substitutes are available, making the demand more elastic.

Table 6-2 -Refer to Table 6-2. Assume That an Economist Has Estimated