The following information pertains to three different products being sold by Modular Company: Which products have an elastic demand curve?
A) Product B
B) Product A
C) Product C
D) both a and c

Question

The following information pertains to three different products being sold by Modular Company:  Which products have an elastic demand curve?
A) Product B 
B) Product A 
C) Product C 
D) both a and c

Quizplus · Accepted Answer

An elastic demand curve means that a small change in price leads to a significant change in demand. To determine the elasticity of demand, we look at how sensitive customers are to changes in price. If a product has many substitutes and is not considered essential, then the demand for that product is often elastic. Product B is a luxury item that has many substitutes, so it is likely to have an elastic demand curve. Products A and C are essential items that have fewer substitutes, so their demand is likely to be less elastic.

The Following Information Pertains to Three Different Products Being Sold