Question

If a normal good competes with 30 similar goods and all 31 goods give the consumer equal satisfaction, the demand for the normal good......:

Answer 1

Answer: Perfectly elastic.

Step-by-step explanation:

If a normal good competes with many identical goods or substitute goods and all the goods gives the same level of satisfaction then the demand for the normal is perfectly elastic.

There are large number of firms which are selling similar product, so if any firm increases their price by a little amount then as a result demand for their product falls to zero.

Perfectly elastic demand refers to the demand in which any increase in the price would cause the quantity demanded for the product falls to zero.