If product X is a luxury, and for product Y there are no close substitutes, then we should expect the price elasticities of demand for X and Y to be relatively
A) elastic and inelastic, respectively.
B) inelastic and elastic, respectively.
C) elastic for both.
D) inelastic for both.
E) difficult, if not impossible, to determine from the information given.

Question

Quizplus · Accepted Answer

Luxury goods tend to have more elastic demand because consumers can forego them when prices rise. Products with no close substitutes tend to have inelastic demand because consumers have fewer alternatives.

If Product X Is a Luxury, and for Product Y