Asked by Jillian Hearne on Jul 09, 2024
Verified
Which is the most accurate statement?
A) The most important determinant of the degree of elasticity of demand is the availability of substitutes.
B) The demand for gasoline is very elastic.
C) The advertiser wants to push her product's demand curve to the right and make it more elastiC.
D) Supply is most elastic in the market period.
Elasticity of Demand
A measure of how much the quantity demanded of a good responds to a change in the price of that good, with higher elasticity indicating greater responsiveness.
Degree of Elasticity
A measure of how much the quantity demanded of a good responds to a change in the price of that good, providing insight into the good's price sensitivity.
Availability of Substitutes
The presence of alternative products or services that consumers can choose instead of the primary product, affecting the demand and price elasticity of goods.
- Comprehend the principles of demand and supply elasticity.
- Comprehend the role of substitutes and necessities in evaluating demand elasticity.
Verified Answer
SN
Sabrina NormanJul 15, 2024
Final Answer :
A
Explanation :
The availability of substitutes is the primary determinant of the degree of elasticity of demand. If there are many substitutes available, consumers can easily switch to other products if the price of one of the products increases, making the demand for that product more elastic. If there are few substitutes available, consumers may continue to buy the product even if the price increases, making the demand for that product less elastic.
B is not accurate because the demand for gasoline is actually relatively inelastic because there are few substitutes available for it.
C is not accurate because an advertiser cannot directly affect the elasticity of demand for a product; they can only influence it indirectly by changing the factors that affect demand, such as price or consumer preferences.
D is not accurate because supply is not necessarily most elastic in the market period; it depends on the nature of the product and the availability of inputs.
B is not accurate because the demand for gasoline is actually relatively inelastic because there are few substitutes available for it.
C is not accurate because an advertiser cannot directly affect the elasticity of demand for a product; they can only influence it indirectly by changing the factors that affect demand, such as price or consumer preferences.
D is not accurate because supply is not necessarily most elastic in the market period; it depends on the nature of the product and the availability of inputs.
Learning Objectives
- Comprehend the principles of demand and supply elasticity.
- Comprehend the role of substitutes and necessities in evaluating demand elasticity.