The price elasticity of a good will tend to be larger:
A)the longer the relevant time period for behavior change.
B)the fewer the number of substitute goods available.
C)if it is a staple or necessity with few substitutes.
D)if the share of income spent on the good is small.

Question

Quizplus · Accepted Answer

The longer the relevant time period for behavior change, the more time consumers have to adjust their consumption habits and find substitutes, making the demand for the good more elastic. In contrast, options B and C suggest that fewer substitutes or necessity status would result in a more inelastic demand, while option D suggests that a smaller share of income spent on the good would result in a more elastic demand, but none of these factors are as relevant as the time period for behavior change.

The Price Elasticity of a Good Will Tend to Be