Asked by Jeffery Earlywine on Sep 24, 2024
Verified
As the number of substitutes for a good increases,the absolute value of its own-price elasticity
A) stays the same
B) increases
C) decreases
D) the good becomes perfectly inelastic.
Own-price Elasticity
a measure of how much the quantity demanded of a good or service changes in response to a change in its price.
Number of Substitutes
The quantity of alternative products or services that consumers can choose from in a market.
Absolute Value
A number’s distance from zero on the number line, without considering direction; always a positive value or zero.
- Familiarize oneself with the association between price modifications and the responsiveness of demand.
- Investigate the relevance of substitutes and complements in the analysis of demand elasticity.
Verified Answer
LB
Lizzie Bartelsabout 19 hours ago
Final Answer :
B
Explanation :
As the number of substitutes for a good increases, consumers have more options to choose from, making them more sensitive to changes in price. This results in an increase in the absolute value of the own-price elasticity, indicating that the good is more sensitive to price changes.
Learning Objectives
- Familiarize oneself with the association between price modifications and the responsiveness of demand.
- Investigate the relevance of substitutes and complements in the analysis of demand elasticity.