A product that has good substitutes is likely to have a higher price elasticity of demand than one that does not.

Question

Quizplus · Accepted Answer

When a product has good substitutes, consumers have more options to choose from, and they may switch to a substitute if the price of the original product increases. This means that the demand for the original product is more elastic, as the quantity demanded is more responsive to changes in price. In contrast, if there are no good substitutes for a product, consumers may be more willing to pay a higher price to continue buying the product, making the demand for that product less elastic.

A Product That Has Good Substitutes Is Likely to Have