Which of These Products Would Have the Highest Price Elasticity

question 254

Multiple Choice

Which of these products would have the highest price elasticity of demand?

• A) cigarettes
• B) hot dogs sold by a street vendor
• C) gasoline
• D) blood-thinning medication prescribed to patients who have had a stroke

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Definitions:

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, where no single party can influence the market price.

Complementary Resource

A good or service that enhances the value or performance of another primary product or service.

Profit-maximizing Firm

A company that adjusts its production and sales strategies to achieve the highest possible profit, considering its costs and market demand.

Substitution Effect

This effect describes the change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute more expensive items with cheaper ones.