The absolute price elasticity of demand for a product that has many good substitutes is probably
A) less than 1.
B) greater than 1.
C) equal to 1.
D) infinity.

Question

Quizplus · Accepted Answer

When a product has many good substitutes, consumers can easily switch to alternatives if the price of the product increases. This means that a small change in price will lead to a relatively large change in quantity demanded due to the availability of close substitutes. Therefore, the absolute price elasticity of demand for a product with many good substitutes is greater than 1.

The Absolute Price Elasticity of Demand for a Product That