Elasticity of demand for a business product is likely to increase:
A) as the product becomes a greater part of the total cost of the finished good.
B) if the product will be sold in both the consumer and business markets.
C) when the product is relatively small and inexpensive.
D) if there is no derived demand for the business product.
E) if monopolistic competition exists in the market.

Question

Quizplus · Accepted Answer

As the product becomes a greater part of the total cost of the finished good, buyers are more sensitive to price changes, increasing elasticity of demand.

Elasticity of Demand for a Business Product Is Likely to Increase