CIMA BA1 · Chapter 6 · Question 5 of 10
Which of the following is likely to make demand for a product more price elastic?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The product has many close substitutes
Explanation
Demand is more elastic when consumers can easily switch to close substitutes. Necessities, habit-forming goods and goods taking a tiny share of income tend to have inelastic demand.
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