Explain how the availability of substitutes affects demand elasticity
What will be an ideal response?
Typically the more substitutes that are available for a given product the more price elastic that product will become. That is, consumers will likely be more sensitive to a given price change. By contrast, in markets where there are few or poor quality substitutes this will likely lead to be more price inelastic because of the smaller number of choices available. In this case consumers are likely to be less sensitive to a given price change.
You might also like to view...
Many economists argue that, in the long run, the economy self-corrects and achieves full employment. This argument is known as the:
a. natural rate hypothesis. b. incomes policy approach. c. political business cycle theory. d. Keynesian cross model.
Use the following table to answer the next question. Gross Investment$172 billionNet Foreign Income$18 billionIndirect Business Taxes$15 billionRent Net Exports-$96 billionDepreciation (Capital Consumption)$145 billionGovernment Purchases$188 billionWages$763 billionProfits and Losses$90 billionConsumption$895 billionInterest$74 billionWhat is the value of rent?
A. $1,141 billion B. $54 billion C. $2,264 billion D. $90 billion
Refer to the above figure. Excess quantity demanded will exist when
A. quantity demanded equals 3. B. the price equals $10. C. the price equals $6. D. the price is between $0 and $6.
Explain why the economic analysis of monopolistic competition is so complex
What will be an ideal response?