Other things being equal, demand is less elastic A. the smaller the percentage of a total budget that a family spends on a good

Question

4 years ago

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Other things being equal, demand is less elastic A. the smaller the percentage of a total budget that a family spends on a good

. B. the more expensive the good is. C. the longer is the time period for adjustment. D. the more substitutes a good has.

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1 answer:

telo118 [61] · Answer 1 · 2022-02-06T01:38:31+03:00

Answer:

The correct answer is letter "D": the more substitutes a good has.

Explanation:

Price elasticity of demand is the result of the relation between changes in price and quantity demanded for a good or service. <em>Price elasticity of demand is calculated dividing the percentage change in quantity demanded by the percentage change in price.</em> If the result is equal to or greater than 1, the demand is elastic. This situation implies a minimum change in price will affect by far the quantity demanded of that good or service.

Thus,<em> products with many substitutes are elastic because a minimal change in their price would represent a large change in quantity demanded since consumers will find similar products that satisfy their needs in the same proportion.</em>

Other things being​ equal, demand is less elastic A. the smaller the percentage of a total budget that a family spends on a good

Other things being equal, demand is less elastic A. the smaller the percentage of a total budget that a family spends on a good