a good will have a more elastic demand, the: a. greater the availability of close substitutes. b. more broad the definition of the market. c. shorter the period of time. d. more it is regarded as a necessity. e. all of the

Question

Business

Dale

11 March, 12:28

a good will have a more elastic demand, the: a. greater the availability of close substitutes. b. more broad the definition of the market. c. shorter the period of time. d. more it is regarded as a necessity. e. all of the

+1

Answers (1)

Know the Answer?

Tiana Ford · Answer 1

The greater the availability of close substitutes

Explanation:

Demand tends to be more elastic the greater the availability of close substitutes. This is because with any increase in the price of a given commodity, all other things being equal, consumers will easily shift their demand to the close substitutes. In the same vein, when the price of the commodity falls relative to the price of its close substitutes, demand will shift from the close substitutes to it.

A more broad definition of the market for a commodity will tend to make demand more inelastic as the wider the market, the more the demand for the commodity irrespective of the price level.

A shorter period of time would likely make demand inelastic as a reasonable amount of time is needed for pricing information to get to the market and for consumers to react to price changes. The shorter the time, therefore, the more inelastic demand tends to become.

The more a commodity is regarded as a necessity, the more inelastic its demand becomes. Necessities are commodities that NEEDS to be consumed irrespective of their price. Power will be an example. Another broad example is food. Irrespective of their prices, consumers have no choice than to consume goods classified as necessities.