How does the existence of substitutes affect the price elasticity of demand?

Answers

Answer 1
The price elasticity of demand (PED) is a calculation of how much the measure demanded changes with a change in price. When there is accessibility of substitute goods, the more probable substitutes there are for a given good or service, the greater the elasticity. When some close substitutes are accessible or available, consumers can easily change from one good to another even if there is only a small change in price. On the other hand, if no substitutes are available, demand for a good is more likely to be inelastic.
Answer 2
Final answer:

The existence of substitutes affects the price elasticity of demand by making it more elastic. Consumers have the option to choose alternative products instead of paying higher prices, leading to a larger change in the quantity demanded. The availability of substitutes influences how responsive consumers are to changes in price.

Explanation:

The existence of substitutes affects the price elasticity of demand. When there are close substitutes available for a product, the demand becomes more elastic. This means that consumers have the option to choose an alternative product instead of paying a higher price. As a result, a small price change can lead to a larger change in the quantity demanded.

For example, if the price of brand A soda increases, consumers may choose to buy brand B soda instead, as they are close substitutes. This shift in demand from brand A to brand B shows the price elasticity of demand for soda. Therefore, the availability of substitutes influences how responsive consumers are to changes in price.


Related Questions

economic systems seek to answer what key economics questions? Select all that apply
a) how should goods and services be produced?
b)where goods and services will be produced?
c)when goods and services will be produced?
d)what goods and services will be produced?
e)who will consume goods and services?

Answers

The key economic questions are:
D what goods and services will be produced
A. how should goods and services be produced
E. who will consume goods and services

By following these three basic questions a potential businesses will have a higher chance to penetrate the market and take profits for their products
Final answer:

Economic systems seek to answer how goods and services should be produced, what goods and services will be produced, and who will consume goods and services.

Explanation:

Economic systems seek to answer the following key economic questions:

How should goods and services be produced? This refers to the choice of production methods and technology that will be used.What goods and services will be produced? This pertains to deciding what products and services will be produced to meet consumer demand.Who will consume goods and services? This encompasses determining the allocation of resources and distribution of goods and services among individuals and groups.

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When might you expect a manager to offer a gentle reminder about hand washing?

Answers

Answer:

The correct answer is "If you reach down to pet a service animal".

Explanation:

A manager may offer a gentle reminder about handwashing to a staff member in charge when that person approaches to pet a service animal. Personal hygiene is the responsibility of each individual, but if a person in charge is observed performing an act that involves poor hygiene, hand washing may be suggested.

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Broker jill has an agreement with seller alice that says jill will receive compensation if anyone except alice sells alice’s home. what kind of agreement is this?

Answers

This kind of agreement is called EXCLUSIVE AGENCY.
Exclusive agency is a contractual agreement under which the listing broker acts as an agent and the owner agree to pay a commission to him if the property is sold through the effort of any person with the exception of the owner of the property.

Technician a says that a brake spoon is used to adjust brake shoes when the drum is installed. technician b says that a brake hold-down spring tool is used to remove and install hold-down springs. who is correct?

Answers

install hold down springs the last one is correct

True or false within bureaucracies, positions are assigned specific responsibilities or given authority in a hierarchical arrangement.

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The statement above is TRUE. The characteristics of a bureaucracy organization include the following; division of duties into sphere of competence, use of written records, selection on the basis of competence, training for each position, hierarchical arrangement of offices and salary is based on position and the tenure of office. This type of organization is often find in the public sector. 

In his liquidity preference framework, keynes assumed that money has a zero rate of return; thus, when interest rates ________ the expected return on money falls relative to the expected return on bonds, causing the demand for money to ________.

Answers

............. thus, when interest rate RISE the expected return on money falls relative to the expected returns on bonds, causing the demand for money to FALL. Keynes' liquidity theory holds that money is the most liquid asset and assets are believed to be in two forms, which are money and bonds. 
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