The price elasticity of demand for a good or service will be greater in absolute value if many close substitutes are available. In at least three well composed paragraphs, please explain this economic behaviour and provide two examples.
Price Elasticity of Demand:
The price elasticity of demand is the ratio of the percentage change in the quantity demanded of a particular good with respect to the percentage change in its price. It is used to measure the responsiveness of the quantity demanded of a good or service with respect to the changes in the price.
Answer and Explanation: 1
The price elasticity of demand is determined by a number of factors such as the availability of substitutes, the percentage of income exhausted on the...
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fromChapter 2 / Lesson 11
In microeconomics, the principle of price elasticity of demand is important to understand. Learn the definition of price elasticity of demand, understand the formula and its categories, and see some calculation examples.