The Demand for a Product Is Likely to Be More

question 58

Multiple Choice

The demand for a product is likely to be more elastic:

• A) the smaller the share of the total budget spent on the product.
• B) when more complementary products are available.
• C) in the short run than in the long run.
• D) when more good substitutes for the product are available.

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Definitions:

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they place on it.

Income

The extraction of financial value, repetitively over time, from working engagements or investment pursuits.

Income Elasticity

A measure of how much the demand for a good or service changes with a change in the consumer's income.

Per Capita

A statistical measure that represents the average per person of a particular indicator, such as income or GDP.