If a product has only a few acceptable substitutes, demand for the product is most likely to be
A) very inelastic.
B) inelastic.
C) elastic.
D) very elastic.

Question

Quizplus · Accepted Answer

When there are only a few acceptable substitutes for a product, it means that consumers have few options to switch to if the price of the product increases. This makes the demand for the product more inelastic, as consumers are willing to pay a higher price for the product rather than switch to a substitute. However, if there were many acceptable substitutes, the demand would be more elastic, as consumers would be more likely to switch to a substitute if the price of the product increased.

If a Product Has Only a Few Acceptable Substitutes, Demand