Suppose a 5 percent increase in price causes a 25 percent decrease in quantity demanded. Which of the following statements is most likely true?
A)There are many substitutes for this good.
B)There are few substitutes for this good.
C)The market for the good is a necessity.
D)The price change persists over a very short period of time.

Question

Suppose a 5 percent increase in price causes a 25 percent decrease in quantity demanded. Which of the following statements is most likely true?
A)​There are many substitutes for this good.
B)​There are few substitutes for this good.
C)​The market for the good is a necessity.
D)​The price change persists over a very short period of time.

Quizplus · Accepted Answer

A significant decrease in quantity demanded in response to a small increase in price suggests that consumers can easily switch to other products, indicating the presence of many substitutes.

Suppose a 5 Percent Increase in Price Causes a 25