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Which of the following goods will have a higher price elasticity of demand?

a. A good with few substitutes.

b. A good with many substitutes.

c. A good that represents a small proportion of the consumer's budget.

d. A good that is broadly defined.

e. A good that is a necessity.

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Mahe Alam
Mahe AlamLv10
16 Sep 2020

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Related questions

Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand:
• Number of substitutes
• Whether the good is a necessity or a luxury
• Percentage of one's budget spent on the good
• Time horizon being considered
 
A. A good with many close substitutes is likely to have relatively ___________ demand since consumers can easily choose to purchase one of the close substitutes if the price of the good rises.
 
B. 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?
1. Chemotherapy for cancer patients
2. Yacht
 
The price elasticity of demand for good also depends on how you define the good.
 
C. 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.
1. Beverages
2. Merlot
3. Wine
 
D. The price elasticity of demand is also affected by the given time horizon. Other things being equal, the demand for natural gas will tend to be _________ elastic in the short run than in the long run.

 

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.

The value of the price elasticity of demand for a good will be relatively large when

A) the good is a luxury rather than a necessity.

B) there are no good substitutes available for the good.

C) the time period in question is relatively short.

D) All of the above are correct.

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