The most important determinant of the elasticity of demand is the:
A) number of consumers.
B) number of substitutes.
C) size of the population.
D) level of income in the economy.

Question

Quizplus · Accepted Answer

The number of substitutes is the most important determinant of the elasticity of demand. When there are a large number of substitutes available for a product, consumers have more options to choose from in case the price of the product increases. This makes the demand for the product more elastic, meaning that a change in price results in a relatively larger change in quantity demanded. On the other hand, when there are few substitutes available, consumers have less bargaining power and the demand becomes less elastic. The other options are not as important in determining the elasticity of demand as the number of substitutes.

The Most Important Determinant of the Elasticity of Demand Is