1. Determinants of the price elasticity of demand (2nd)Consider some determinants of the price elasticity of demand:•The availability of close substitutes•Whether the good is a necessity or a luxury•How broadly you define the market•The time horizon being considered A good with many close substitutes is likely to have relatively demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?Yacht Chemotherapy for cancer patients The price elasticity of demand for a good also depends on how you define the good.Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.CategoriesMost ElasticIn BetweenLeast ElasticWine Beverages Merlot The price elasticity of demand is also affected by the given time horizon.Other things being equal, the demand for natural gas will tend to be elastic in the short run than in the long run. 1. Determinants of the price elasticity of demandConsider some determinants of the price elasticity of demand:• The availability of close substitutes• Whether the good is a necessity or a luxury• How broadly you define the market• The time horizon being consideredA good with many close substitutes is likely to have relativelydemand, since consumers can easily choose to purchase one of the closesubstitutes if the price of the good rises.A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately thesame, which one has the least elastic demand?O YachtChemotherapy for cancer patientsThe price elasticity of demand for a good also depends on how you define the good.Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elasticdemand, and which will have demand that falls in between.CategoriesMost ElasticIn BetweenLeast ElasticWineBeveragesMerlotThe price elasticity of demand is also affected by the given time horizon.Other things being equal, the demand for natural gas will tend to beelastic in the short run than in the long run.

Answered: A good with many close substitutes is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Determinants of the price elasticity of demand (2nd)

Consider some determinants of the price elasticity of demand:

•	The availability of close substitutes
•	Whether the good is a necessity or a luxury
•	How broadly you define the market
•	The time horizon being considered

A good with many close substitutes is likely to have relatively demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises.

A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?

Yacht

Chemotherapy for cancer patients

The price elasticity of demand for a good also depends on how you define the good.

Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.

Categories	Most Elastic	In Between	Least Elastic
Wine
Beverages
Merlot

The price elasticity of demand is also affected by the given time horizon.

Other things being equal, the demand for natural gas will tend to be elastic in the short run than in the long run.

1. Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
demand, since consumers can easily choose to purchase one of the close
substitutes if the price of the good rises.
A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the
same, which one has the least elastic demand?
O Yacht
Chemotherapy for cancer patients
The price elasticity of demand for a good also depends on how you define the good.
Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic
demand, and which will have demand that falls in between.
Categories
Most Elastic
In Between
Least Elastic
Wine
Beverages
Merlot
The price elasticity of demand is also affected by the given time horizon.
Other things being equal, the demand for natural gas will tend to be
elastic in the short run than in the long run.

Expert Solution

Step 1

Price elasticity of demand is a measurement of the percentage change in quantity demanded of a product in relation to a percentage change in its price. Depending on the price elasticity of demand, demand can be elastic, inelastic, or unit elastic. For an elastic demand, the percentage change in quantity demanded is more than the percentage change in price. For inelastic demand, the percentage change in the quantity demanded is less than the percentage change in the price. For a unit elastic demand, percentage change in the quantity demanded is the same as the percentage change in the price.

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