Which of the following statements about price elasticity of demand most accurate?
A)The more substitutes a product has,the more likely it is to be price elastic.
B)All products show some price inelasticity.
C)Nondiscretionary, (necessary)purchases are price elastic.
D)With inelastic demand,reducing price has a very large impact on revenues.
E)With inelastic demand,manufacturers change prices frequently to capitalize on consumer behavior.

Question

Quizplus · Accepted Answer

The availability of substitutes is a major determinant of price elasticity of demand. If a product has many substitutes, consumers have more options to choose from if the price of the product increases, making the demand more elastic (responsive to price changes).

Which of the Following Statements About Price Elasticity of Demand