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29 September, 03:57

All else equal, the price elasticity of demand for a good tends to be lower: A. if the good represents a large share of a consumer's budget. B. if the good has many close substitutes. C. if the good has few close substitutes. D. in the long run.

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  1. 29 September, 07:51
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    C. if the good has few close substitutes.

    Explanation:

    The price elasticity of demand refers to the percentage of change in the demand when the price suffers a variation. The price elasticity of the demand is higher when a change in the price of the product generates a big change in the demand which can be the result of the good having many substitutes. Also, the price elasticity of the demand is lower when a change in the price causes a small change in the demand which can be explained by the good having few substitutes. According to this, the answer is that all else equal, the price elasticity of demand for a good tends to be lower if the good has few close substitutes.
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