A Product's Price Elasticity of Demand Is Likely to Be

question 94

Multiple Choice

A product's price elasticity of demand is likely to be greater

• A) if it only has a few substitutes.
• B) if consumers spend a small proportion of income on the product.
• C) the less time consumers have to adjust to price changes.
• D) if the product is a luxury good rather than a necessity.
• E) Both answers C and D are correct.

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Definitions:

Irreversible Thinking

Characterizes a cognitive limitation where an individual is unable to understand that certain processes can be reversed to their original condition.

Conservation

The cognitive ability to understand that certain properties of objects or substances remain the same even when their appearance changes.

Tadpole-Like Figure

A shape or form that resembles the larval stage of a frog or toad, characterized by a bulbous head and a long, thin tail.

Appearance-Reality Distinction

The cognitive skill to differentiate between how things appear and how they actually are, which develops in early childhood.