An important determinant of elasticity is the availability of substitutes.

Question

Quizplus · Accepted Answer

The availability of substitutes is an important factor that affects the elasticity of demand. If there are many substitutes available for a product, buyers can easily switch to other options if the price of the product increases. This makes the demand for the product more elastic. Conversely, if there are few substitutes available, buyers have few options and are more likely to continue purchasing the product even if the price increases. This makes the demand for the product more inelastic.

An Important Determinant of Elasticity Is the Availability of Substitutes