As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to
A)become less price elastic
B)become more price elastic
C)increase
D)stay the same
E)become unit elastic

Question

Quizplus · Accepted Answer

As DVDs become more popular, the demand for video cassettes is likely to decrease. This means that consumers will have more substitutes and can easily switch from one format to another. When there are more substitutes available, the price elasticity of demand tends to increase. Therefore, demand for video cassettes is likely to become more price elastic.

As DVDs Become Popular Substitutes for Video Cassettes, Demand for Video