commodity showing high elasticity of demand often has a large number of close substitutes in the market. Do you agree?
Dear Student
Yes, we agree with the given statement. Elasticity of demand is high in case of goods with close substitutes (for example, tea has its substitute in coffee). Availability of close substitutes makes it possible for the consumer to switch from one commodity (like tea) to the other (like coffee) in response to change in the relative price structure. Accordingly, elasticity of demand is high.
Regards
Yes, we agree with the given statement. Elasticity of demand is high in case of goods with close substitutes (for example, tea has its substitute in coffee). Availability of close substitutes makes it possible for the consumer to switch from one commodity (like tea) to the other (like coffee) in response to change in the relative price structure. Accordingly, elasticity of demand is high.
Regards