Resource X has many close substitutes, whereas resource Y has no close substitutes. Other things equal, we would expect

a. the demand for resource Y to be more elastic than the demand for resource X.

b. resources X and Y to be close substitutes.

c. resource X to be more expensive than resource Y.

d. the demand for resource X to be more elastic than the demand for resource Y.

Question

Business

Nosey

24 August, 19:26

Resource X has many close substitutes, whereas resource Y has no close substitutes. Other things equal, we would expect

a. the demand for resource Y to be more elastic than the demand for resource X.

b. resources X and Y to be close substitutes.

c. resource X to be more expensive than resource Y.

d. the demand for resource X to be more elastic than the demand for resource Y.

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Answers (1)

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Annabelle Baird · Answer 1

Option D. The demand for resource X to be more elastic than the demand for resource Y.

Explanation:

The resource X which has close substitutes or greater number of substitutes are highly elastic because small increase in its price will drop the demand of the resource significantly as the customer will opt to substitutes due to price increase.

On the other hand, resource Y has least number of substitutes or no close are not highly elastic because small increase in its price will not drop the demand of the resource Y considerably as the customer will not have any option beside Resource Y.