As the number of substitutes for a good increases,its own-price elasticity becomes more
A)Unitary
B)Relatively elastic
C)relatively inelastic.
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

When the number of substitutes for a good increases, consumers have more options to choose from, which means that a price increase of that good will cause consumers to switch to alternative products. This makes the demand for the good more sensitive to price changes, resulting in a more elastic demand curve. Therefore, the own-price elasticity of the good becomes relatively elastic when the number of substitutes increases.

As the Number of Substitutes for a Good Increases,its Own-Price