Which of the following is a correct statement about the own price elasticity of demand?
A) Demand tends to be more inelastic in the short term than in the long term.
B) Demand tends to be more elastic as more substitutes are available.
C) Demand tends to be more inelastic for goods that comprise a smaller share of a consumer's budget.
D) All of the statements are correct.

Question

Quizplus · Accepted Answer

All the statements provided are correct regarding the own price elasticity of demand. Statement A reflects that consumers have less time to adjust their consumption habits in the short term, making demand more inelastic. Statement B indicates that the availability of substitutes makes it easier for consumers to switch away from a good as its price increases, increasing the elasticity of demand. Statement C suggests that goods which make up a smaller portion of a consumer's budget are less sensitive to price changes, making their demand more inelastic.

Which of the Following Is a Correct Statement About the Own