Question

Why would the brand name of a product have a higher elasticity of demand compared to the store brand?

1) Because the brand name of a product is more recognizable and trusted by consumers
2) Because the brand name of a product is associated with higher quality and prestige
3) Because the brand name of a product is often more expensive than the store brand
4) Because the brand name of a product is heavily advertised and promoted

Answer 1

The brand name of a product may have a higher elasticity of demand compared to the store brand due to recognizability and trust, perceived quality and prestige, higher price, and advertising and promotion.

Step-by-step explanation:

The brand name of a product may have a higher elasticity of demand compared to the store brand for several reasons:

1. Recognizability and trust: The brand name of a product is often more recognizable and trusted by consumers. This can create a higher demand for the product, making it more elastic.
2. Perceived quality and prestige: The brand name of a product is often associated with higher quality and prestige. Consumers may be willing to pay a higher price for a branded product, making the demand more elastic.
3. Higher price: The brand name of a product is often more expensive than the store brand. Higher priced goods are generally more elastic than inexpensive goods. Consumers may be more responsive to price changes for branded products.
4. Advertising and promotion: The brand name of a product is often heavily advertised and promoted. This can create more awareness and demand for the product, making it more elastic.