For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good? a.        The relevant time horizon is short.   b.       The good is a luxury.               c.        The market for the good is narrowly defined.              d.       There are many close substitutes for this good

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

a.        The relevant time horizon is short.  

b.       The good is a luxury.              

c.        The market for the good is narrowly defined.             

d.       There are many close substitutes for this good.         

Selected Answer:

C. 

C

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‘Demand is price inelastic when, a sudden difference in price causes a smaller percentage change in the demand

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