Read the two statements and choose the correct option.
I. A good that takes a tiny share of income has inelastic demand.
II. A good with no close substitute has elastic demand.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true: a price change on a tiny item barely affects the budget.
II is false: without a substitute, buyers have nowhere to switch, so demand is inelastic.

Ten questions from Price Elasticity of Demand, at your own pace.

Ten questions from Price Elasticity of Demand, at your own pace.

Read the two statements and choose the correct option.I. A good that takes a tiny share of income has inelastic demand.II. A good with no close substitute has elastic demand.