Suppose That Good X Has Few Close Substitutes and That

question 40

Short Answer

Suppose that good X has few close substitutes and that good Y has many close substitutes. Which good would you expect to have more price inelastic demand?

---

Definitions:

Government Intervention

Actions by a government to influence or directly manage an economy or specific sectors, aiming to correct market failures, stimulate economic growth, or achieve social objectives.

Externality Problems

Situations in economics where the actions of individuals or businesses have effects, either positive or negative, on unrelated third parties that are not reflected in the cost or benefit of the actions.

Social Welfare

A holistic measure of the well-being and quality of life of individuals and groups within a society.

Rights To Pollute

Permits or allowances that grant entities the authorization to emit certain amounts of pollutants, often used in regulatory systems to control environmental damage.