Explain why an item that has many close substitutes tends to have an elastic demand

1 answer:

6 0

The item that has many close substitutes tend to have an elastic demand since this means that the consumers have a lot of variations to choose from. This makes the demand for the item very dependent on the number of consumers this item caters. The more substitutes mean more competition, more choices for the consumers, less demand for a particular item.

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Problem 1-11 For most products, higher prices result in a decreased demand, whereas lower prices result in an increased demand.

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Answer:

The firm will sell 600 units at $20

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Giving the following information:

d = annual demand for a product in units

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