Demand for a good will tend to be more price elastic if it exhibits which of the following characteristic? A

Economics Dec 18, 2020

Demand for a good will tend to be more price elastic if it exhibits which of the following characteristic?

A. There is little time for the consumer to adjust to the price change.

B. It is a non-durable (as opposed to a durable good)

C. It accounts for a small part of the consumer?s total income.

D. The good has many available substitutes.

Expert Solution

An answer to this question is:

D. The good has many available substitutes.

When a product has many substitutes, the clients have little patience for the price hike. Therefore, a small increase in price will make the consumers switch to substitutes. The following graph illustrates a price elastic demand. A small variation in price causes a substantial fluctuation in quantity bought.

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