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The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. True or False True False

User Morgar
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Answer:

False.

Step-by-step explanation:

A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.

Mathematically, the price elasticity of demand is given by the formula;


Price \; elasticity \; of \; demand = \frac {percent \; change \; in \; quantity \; demanded}{percent \; change \; in \; price}

The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.

A substitute product can be defined as a product that a consumer sees as an alternative to another product and as such would offer similar benefits or satisfaction to the consumer.

Generally, consumers would like to be buy a product as its price falls or become inexpensive.

Hence, the smaller the number of good substitutes for a product, the lesser will be the price elasticity of demand for it.

For substitute products (goods), the price elasticity of demand is always positive because the demand of a product increases when the price of its close substitute (alternative) increases.

User Rabia
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