Asked by Taylor Monroe on Jul 16, 2024
Verified
There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine.We can expect the demand for:
A) Quaker State oil to be more price-inelastic than is demand for engine checkups.
B) the two to be equally price-elastic.
C) car checkups to be more price-elastic than is demand for Quaker State oil.
D) Quaker State oil to be more price-elastic than is demand for engine checkups.
Quaker State Oil
A brand known for producing motor oil and other automotive lubricants and products, with a long history in the United States.
Price-elastic
A product or service is considered price-elastic when its demand significantly changes in response to a change in its price; high elasticity indicates significant changes in demand.
- Assess the components that determine the price flexibility of demand, including the existence of alternative options and the amount of budget allocated for the good.
Verified Answer
CM
Chugh MannuJul 21, 2024
Final Answer :
D
Explanation :
When there are many close substitutes for a product, consumers can easily switch to another brand if the price of the product increases, making the demand for that product more price-elastic. Since there are several close substitutes for Quaker State oil, its demand is more price-elastic. In contrast, with fewer substitutes for a complete checkup of a car's engine, the demand for engine checkups is less price-elastic, as consumers have fewer alternatives.
Learning Objectives
- Assess the components that determine the price flexibility of demand, including the existence of alternative options and the amount of budget allocated for the good.