Asked by Tiber Septims on Jun 10, 2024
Verified
A gas station opened up on the highway in a patch where there are no gas stations close by.It is more likely to be able to set higher prices because
A) the demand for its product is more inelastic due to an unavailability of substitutes
B) the demand for its product is more elastic due to an unavailability of substitutes
C) the demand for its product is more inelastic due to an availability of substitutes
D) the demand for its product is more elastic due to an availability of substitutes
Demand
The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.
Gas Station
A facility where gasoline (petrol) and often other fuels and automotive products are sold to motorists.
Unavailability of Substitutes
A market condition where consumers have no alternative products or services to choose from, often leading to less price sensitivity.
- Assess the significance of complementary and substitute goods in understanding demand elasticity.
Verified Answer
AA
Anisha AndrewsJun 11, 2024
Final Answer :
A
Explanation :
When there are no gas stations close by, the demand for gas becomes more inelastic because consumers have no substitutes and will be willing to pay higher prices. Therefore, it is more likely for the gas station to set higher prices.
Learning Objectives
- Assess the significance of complementary and substitute goods in understanding demand elasticity.