A normal good with close substitutes is likely to have its price elasticity of demand?

Assessment: JAMB UTME - Economics - 2001 Subject: Economics

Question 1 Report

A normal good with close substitutes is likely to have its price elasticity of demand?
Answer Details
A normal good with close substitutes is likely to have its price elasticity of demand greater than unity. This means that a small change in the price of the good will result in a relatively larger change in the quantity demanded. When there are close substitutes for a good, consumers have more options to choose from if the price of the good increases, and therefore the demand for that good becomes more sensitive to price changes. As a result, the price elasticity of demand is likely to be greater than unity.
Read lesson note on The Theory Of Demand (JAMB)
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