Which of the following would tend to INCREASE the elasticity of demand for good X?
A)a new discovery allows firms to produce X at a much lower cost.
B)the percent of a consumer's income spent on good X declines.
C)a new product,Y,which can be used in place of X,is introduced.
D)both b and c
E)all of the above

Question

Quizplus · Accepted Answer

The introduction of a substitute product (Y) increases the elasticity of demand for good X because consumers can easily switch to the alternative if the price of X rises.

Which of the Following Would Tend to INCREASE the Elasticity