The Value of the Price Elasticity of Demand for a Good

question 250

Multiple Choice

The value of the price elasticity of demand for a good will be relatively large when

• A) there are no good substitutes available for the good.
• B) the time period in question is relatively short.
• C) the good is a luxury as opposed to a necessity.
• D) All of the above are correct.

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Definitions:

Quantity Supplied

The amount of a certain good or service that producers are willing to supply at a given price.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, inversely related to the consumer's income.

Complementary Good

A product that is consumed with another product, where demand for one increases demand for the other.

Normal Good

A good for which demand increases as the income of consumers increases.