Final answer:
The correct answer for the fill-in-the-blank statement is 'elastic; size.' A greater availability of substitutions leads to more elastic demand. Market size can influence the range of available substitutes and thus affect demand elasticity.
Step-by-step explanation:
The sentence should be completed as follows: Generally, the more available substitutions are, the more elastic the demand is. The size of the market can affect demand elasticity in cases of substitutions. Therefore, the correct answer is a) Elastic; size.
When consumers have access to close substitutions, they can easily switch to alternative products if the price of the original product increases. This situation results in a demand that is sensitive to price changes, meaning demand is more elastic. Additionally, the market size is an important factor in determining the demand elasticity because a larger market size may have more potential alternatives or substitute products.
When supply is inelastic, a shift in demand is likely to have a larger effect on equilibrium price rather than quantity. Conversely, when demand is inelastic, a shift in supply will have a more pronounced impact on the equilibrium price as well. In contrast, when demand is elastic, shifts in supply are more likely to affect the equilibrium quantity significantly rather than the price.