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3 June, 05:35

Vernon spends the following percentages of his budget on the following goods: 23 percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good D. For which good is price elasticity of demand the highest, ceteris paribus? a. good A.

b. good B.

c. good C.

d. good D.

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Answers (1)
  1. 3 June, 06:11
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    A) good A.

    Explanation:

    Good A represents the highest percentage of Vernon's budget, so naturally any price change related to good A will affect Vernon greatly and may cause him to change the quantity purchased of that good. Even the price of substitutes or complements of that good will have a large impact in Vernon's purchase decisions.
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