Ask Question
BusinessBusiness
28 May, 22:55

A good that has a lot of substitutes, that is a luxury and is relatively inexpensive will most likely have a price elasticity of demand that is a. a little higher than 1 b. closer to 10 c. a little lower than 1 d. exactly 1

+1
Answers (1)
  1. 29 May, 00:03
    0
    The answer is A.

    Explanation:

    The price elasticity of demand is a little higher than 1.

    This means it is price elastic. That is, the demand is sensitive to price. Why? -

    1. The good has a lot of substitutes, meaning the bargaining power of buyers is high. Any increase in the price of the good will lead to customers switching to the substitutes.

    2. Also, the good is also a luxury good and not a necessity. Luxury goods, unlike necessity goods are not essential. So an increase in price might see customers moving away.

    If a demand is inelastic to price, price elasticity of demand will be less than one.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A good that has a lot of substitutes, that is a luxury and is relatively inexpensive will most likely have a price elasticity of demand ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
1. Do you think evidence-based management seems like common sense? If so, why wasn't it advocated earlier? 2. Are there circumstances in which evidence-based management might not be the best approach? 3.
Answers (1)
Explicit knowledge can be documented and codified, whereas tacit knowledge encompasses insights, judgment, creative processes, and wisdom that come from learning through several trials and errors. True or False
Answers (1)
Which of these describes the proper handwashing technique? When applying soap and scrubbing, you must?
Answers (2)
A budget constraint: a. shows the combinations of consumption bundles that give the consumer the same utility. b. indicates the limited amount of income available to consumers to spend on goods and services. c.
Answers (1)
You recently purchased a stock that is expected to earn 11 percent in a booming economy, 9 percent in a normal economy and lose 6 percent in a recessionary economy. There is a 15 percent probability of a boom, a 74 percent chance of a normal economy.
Answers (1)
New Questions in Business
Harrison Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2017: 1. Retained Earnings, beginning balance, $142,000 2. Retained Earnings, ending balance, $122.000 3.
Answers (1)
A friend keeps a piano until the owner finds a larger apartment. The friend may not play the piano or otherwise receive any benefits of ownership during the bailment. What kind of bailment is this?
Answers (1)
How can you customize existing templates? Check all that apply. Add ""visual cliches"" Adjust the color scheme Select different fonts Eliminate boldface and italics Add a company logo
Answers (1)
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $33.1 million. If the DVDR fails, the present value of the payoff is $11.1 million.
Answers (1)
1. Loan 1 is a 4%, 5-year balloon loan for $3,000,000 with interest due and paid annually on December 31. Drake records interest annually on December 31.
Answers (1)
Home » Business » A good that has a lot of substitutes, that is a luxury and is relatively inexpensive will most likely have a price elasticity of demand that is a. a little higher than 1 b. closer to 10 c. a little lower than 1 d. exactly 1
Sign Up Forgot Password?