One of the most important determinants of a good's price elasticity of demand is
A) the profits of suppliers.
B) the numbers of buyers in the market.
C) the ease with which consumers can substitute other goods for that product.
D) the cost of producing the good.

Question

Quizplus · Accepted Answer

The ease with which consumers can substitute other goods for that product is a primary determinant of price elasticity of demand. If consumers can easily find substitutes for the good, they will be more sensitive to price changes and the demand will be more elastic. This means that small changes in price will lead to large changes in quantity demanded. On the other hand, if there are few substitutes available, consumers will be less sensitive to price changes and the demand will be more inelastic.

One of the Most Important Determinants of a Good's Price