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 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?Chemotherapy for cancer patientsO YachtThe 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 ElasticPantsClothingBoot-cut jeansThe price elasticity of demand is also affected by the given time horizon.Compared to the short-run demand for oil, the demand for oil in the long run will tend to beelastic.

Price elasticity of demand The Price elasticity of demand is the reaction of demand due to change in…

Answered: A good with many close substitutes is…

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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider two markets: the market for waffles and the market for pancakes. The initial equilibrium for both markets is the same, the equilibrium price is $6.50, and the equilibrium quantity is 35.0. When the price is $9.75, the quantity supplied of waffles is 57.0 and the quantity supplied of pancakes is 101.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for pancakes. Please round to two decimal places. Supply in the market for waffles is
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