The price elasticity of demand for a good is relatively elastic if
A) there are a large number of substitutes.
B) the consumer has more time to make decisions about purchasing the good.
C) the good is less of a necessity.
D) all of the above

Question

Quizplus · Accepted Answer

All of the factors mentioned in A, B, and C contribute to a good having relatively elastic demand. When there are many substitutes available, consumers have more options and are more likely to switch to a different product if the price of their preferred good increases. If consumers have more time to make a decision, they can shop around and compare prices, again making them more likely to switch if the price is too high. And if a good is less of a necessity, consumers are more likely to be able to forgo purchasing it altogether if the price is too high. All of these factors contribute to relatively elastic demand.

The Price Elasticity of Demand for a Good Is Relatively