Question

Demand is more elastic: a. ​for goods with no substitutes. b. ​in the short run than in the long run. c. ​for necessities than for luxuries. d. ​for goods with many substitutes than for goods with only a few. e. ​for broadly defined goods than for narrowly defined ones.

Answer 1

Answer:

The correct answer is letter "D": ​for goods with many substitutes than for goods with only a few.

Explanation:

Elasticity is a characteristic of certain items, by which price increases reflect a shift in their demanded quantity. Demand elasticity is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the result is equal or greater than (1) the demand is elastic. If the demand is lower than 1, then it is inelastic.

Goods with many substitutes are considered to be elastic because a minimal change in their price represents a significant change in the quantity demanded. As consumers have different options from where to choose if the price of one of the substitutes increases (for example), the quantity demanded for that good could face a dramatic drop.