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22 October, 14:33

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which ofthe following statements is most likely applicable to this good? a. There are no close substitutes for this good. b. The good is a luxury. c. The market for the good is broadly defined. d. The relevant time horizon is short

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  1. 22 October, 18:23
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    b. The good is a luxury.

    Explanation:

    Here a 2% increase in price causes 12% decrease in quantity demanded. It means elasticity is - 6%. So, demand is very elastic and hence its a luxury good.
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