Final answer:
Demand tends to be less elastic when there are fewer substitutes because consumers continue buying the product despite price increases, resulting in a small change in demand relative to the change in price.
Step-by-step explanation:
With fewer substitutes, demand tends to be less elastic. This is because when there are few or no available substitutes for a product, consumers do not have much choice but to continue purchasing the product even if its price increases. Therefore, the percentage change in demand from price A to price B is smaller than the percentage change in price. In such cases, we say that the demand curve is inelastic in this area; that is, its elasticity value is less than one. For example, a medication with no alternative will have a demand that is less responsive to price changes compared to a beverage like soda, which has many alternatives.