7
QuizMultiple Choice

Case Study: Starting a Business — Unit test

Question 7 • 2102320-Economics HONORS - Edgenuity Teacher

Which is likely to occur if there is a price increase for a good which exhibits elastic demand?

Answer
A
People might buy a more expensive substitute good.
B
People might buy a less expensive complementary good.
C
People might buy a less expensive substitute good.
D
People might buy a more expensive complementary good.

Explanation

With elastic demand, a price increase causes consumers to reduce how much they buy by a relatively large amount. They may switch to a substitute that costs less, so the likely outcome is buying a less expensive substitute good. A complementary good is used together with the original good, not in place of it.

AI-written and checked against the verified answer.

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