the greater is the time under consideration
the greater is the number of substitutes available to buyers
the less expensive is the product in relation to incomes
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is: D. All of the above.
The demand for a product is more inelastic when buyers are less sensitive to changes in price. This means that buyers are less likely to change their quantity demanded in response to a change in price.
There are three main factors that affect the elasticity of demand:
- The time horizon: The longer the time horizon, the more elastic demand will be. This is because buyers have more time to adjust their consumption habits in response to a change in price.
- The number of substitutes available: The more substitutes available, the more elastic demand will be. This is because buyers have more options to choose from, so they are more likely to switch to a substitute if the price of the original product increases.
- The importance of the product in the buyer’s budget: The less important the product is in the buyer’s budget, the more elastic demand will be. This is because buyers are less likely to sacrifice other goods and services to purchase the product if the price increases.
In conclusion, the demand for a product would be more inelastic when the time horizon is longer, the number of substitutes available is greater, and the product is less important in the buyer’s budget.