For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
A)There are many substitutes for this good.
B)The good is a necessity.
C)The market for the good is narrowly defined.
D)The relevant time horizon is long.

Question

Quizplus · Accepted Answer

The relatively small decrease in quantity demanded in response to a price increase suggests that the good is a necessity. People continue to buy it despite the price increase because they need it, indicating inelastic demand.

For a Particular Good, a 12 Percent Increase in Price