If a Good Has a Price-Inelastic Demand,then Which Statement Is

question 219

Multiple Choice

If a good has a price-inelastic demand,then which statement is NOT likely to be characteristic of this good?

• A)It is a necessity and is relatively small proportion of the household budget.
• B)It has many substitutes.
• C)Consumers spend a small percentage of their income on it.
• D)Consumers do not have much time to adjust to market changes.

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Definitions:

Concentration Ratios

Statistical measures used to evaluate the degree of competition within markets by analyzing the market share of the largest firms.

Concentrated Industry

An industry characterized by a small number of large firms that have a significant market share, leading to reduced competition.

Herfindahl-Hirschman Index

A measure used to assess the level of competition within an industry, calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.

Industry Y

This term is not specific; however, it typically refers to a hypothetical or specific sector within the economy during discussions or analyses.