Answered: Which is characteristic of a product…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which is characteristic of a product with elastic demand?
A. The good is regarded by consumers as a necessity
B. There are a large number of good substitutes for the good
C. Buyers spend a small percentage of their total income on the product
D. Consumers have had only a short time period to adjust to changes in price

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Price elasticity is a tool that measures how responsive the change in quantity demanded is to a change in price. A good with a high price elasticity of demand means that a small change in price leads to a large change in quantity demanded, while a low price elasticity means that a change in price has little effect on the quantity demanded. It is an important concept for businesses and policymakers, as it helps them understand how changes in price will impact demand and revenue.

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