12 Questions
What is the most important factor determining the price elasticity of demand for a commodity?
The Availability of Substitutes
If a commodity has many close substitutes available, what is likely to happen to its demand when the price increases?
Demand will be elastic
How does the availability of substitutes impact the price elasticity of demand?
It makes demand elastic
What would happen to the demand for a commodity if it does not have any substitutes available?
Demand will be inelastic
Why does the article mention that Campa Cola's demand is elastic?
Because it has numerous close substitutes
How does a decrease in price for Campa Cola affect consumer behavior according to the text?
Consumers buy more Campa Cola
What is the primary reason that the demand for Campa Cola is elastic?
Campa Cola is a luxury good that consumers can easily substitute with other beverages.
Why is the demand for common salt inelastic?
There are no good substitutes available for common salt, and consumers spend a very small part of their income on it.
Which of the following factors determines the elasticity of demand for a commodity?
The proportion of consumer's income spent on the commodity.
How does the number of uses of a commodity affect its price elasticity of demand?
The greater the number of uses, the higher the price elasticity of demand.
What is the likely reason for the demand for cloth in India being elastic, according to the text?
Households spend a good part of their income on clothing in India.
Based on the information provided, which of the following commodities is likely to have an inelastic demand?
Matches
Test your knowledge on the factors that determine the price elasticity of demand for a commodity. Learn about the availability of substitutes, consumer's income proportion, number of uses of a commodity, complementarity between goods, and the impact of time on elasticity.
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