The demand for a product is
A) more elastic if there are few substitutes for product.
B) more elastic if there are many substitutes for product.
C) more elastic if the product represents a small portion of the individual's budget.
D) B and C are correct.

Question

Quizplus · Accepted Answer

When there are many substitutes for a product, consumers have more options to choose from if the price of the product increases, making the demand more elastic. Choice C is also correct because when a product represents a small portion of an individual's budget, they are less likely to be affected by price changes, making the demand more elastic. However, the question asks for the "best" choice, so B is the more relevant and immediate factor in determining elasticity of demand.

The Demand for a Product Is