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:

Basic Rest-activity Cycle

A circadian rhythm concept suggesting that individuals have intrinsic cycles of rest and activity, notably proposed by sleep researcher Nathaniel Kleitman.

1 Hour

A measure of time equivalent to 60 minutes or 3,600 seconds.

1.5 Hours

A measure of time equivalent to ninety minutes.

3.5 Hours

A period of time equal to three and a half hours or 210 minutes.