When does the elasticity of demand for a firm's product increase substantially?
A) When an industry is no longer concentrated
B) When there is decreased consumer attention to quality
C) When there is nonavailability of labor
D) When there is a lack of substitute products

Question

Quizplus · Accepted Answer

When an industry is no longer concentrated, it implies that there are more firms competing in the market. This increases the number of available substitutes for consumers, making the demand for any single firm's product more elastic. Consumers can easily switch to competitors if the price of one firm's product increases, hence the elasticity of demand increases.

When Does the Elasticity of Demand for a Firm's Product