There are ______ substitutes for oil, so the elasticity of demand for oil is ______ elastic.
A) few; very
B) few; not very
C) many; perfectly
D) many; very

Question

Quizplus · Accepted Answer

The statement suggests that there are few substitutes for oil, so the demand for oil is not very elastic. In economic terms, elasticity measures the responsiveness of demand to changes in price or availability of alternatives. When there are several substitutes for a good, consumers can easily switch to other products if the price of one product (e.g. oil) becomes too high, meaning the demand is elastic. However, if there are few or no substitutes, consumers will continue to buy the product even if the price goes up, indicating the demand is inelastic. Therefore, option B is the best choice as it reflects the low elasticity of demand for oil.

There Are ______ Substitutes for Oil, So the Elasticity of Demand