Sia
Question
Microeconomics
Posted 7 months ago
When is demand inelastic?
Choose 1 answer:
(A) When buyers have a lot of time to shop around
B When there are few substitutes for a good
(c) When it makes up a large share of a person's budget
D When a market is narrowly defined
(E) When a good is a luxury
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Answer from Sia
Posted 7 months ago
Solution
a
Definition of Inelastic Demand: Inelastic demand occurs when the quantity demanded of a good is relatively unresponsive to changes in price. This means that the percentage change in quantity demanded is less than the percentage change in price
b
Few Substitutes: When there are few substitutes for a good, consumers have limited alternatives to switch to if the price of the good increases. This makes the demand for the good inelastic
Answer
B When there are few substitutes for a good
Key Concept
Inelastic Demand
Explanation
Demand is inelastic when there are few substitutes for a good because consumers cannot easily switch to other products, making their demand less sensitive to price changes.
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