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Demand is more elastic when there are many substitutes available, implying that the demand for a broadly-defined product will be less elastic than the demand for a specific brand. As an example, the demand for Cheerios is more elastic than the demand for cereal. Think of another example of a broadly-defined product and specific brand, and explain which demand is more elastic.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

2. elastic than the demand for The demand for a Ford Focus (a brand of compact car) is likely to be a compact automobile because A. Less, there are good substitutes for a Focus. Less, an auto accounts for a small part of a consumer's budget. More, there are many different compact cars on the market. D. More, many drivers are loyal to the Ford brand.

For which of the following products is demand likely to be the most elastic if:
a. the good is broadly defined (e.g., the demand for food as opposed to the demand for carrots).
b. the good has relatively few substitutes.
c. a long period of time is required to fully adjust to a price change in the good.
d. none of the above are true.

Consider some determinants of the price elasticity of demand:

  • The availability of close substitutes
  • Whether the good is a necessity or a luxury
  • How broadly you define the market?
  • The time horizon being considered
 

A good without any close substitutes is likely to have relatively ___________(inelastic/elastic) demand since consumers cannot easily switch to a substitute good if the price of the good rises.

A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?

A. Diamond necklace

B. A heart value for heart attack victims

The price elasticity of demand for good also depends on how you define the good.

Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.

Categories Most Elastic In Between Least Elastic
Food      
Red Bell Peppers      
Vegetables      
 

The price elasticity of demand is also affected by the given time horizon.

If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is__________ (less, more, no more, nor less) elastic in the short run than in the long run.

 

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