Question

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
Select one:
a. "The different brands are almost identical so I always buy the cheapest."
b. "I use so little of that product that when I do buy it, I don't pay much attention to the price."
c. "The brand I buy is so superior to other available brands that I hardly consider the others."
d. "I pinch pennies in buying other products, but like most people I feel I owe it to myself to get the best brand of this product."
a. "The different brands are almost identical so I always buy the cheapest."

Answer 1

Answer:

a. "The different brands are almost identical so I always buy the cheapest."

Explanation:

The statement that best represents a situation where demand for a particular brand would be very elastic is when there are different brands that are almost identical so consumers always buy the cheapest.

Elastic demand is when price have a big effect on the quantity consumers want to buy. It holds that the quantity purchased has an inverse relationship with price. When prices rise, people buy less.

Hence, an increase in price of a product will lead to a fall in its quantity demanded as consumers will switch to buying other available identical products.