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JAMB Economics 1981 Question 24

Question 24

Elasticity

If a commodity has many substitutes, it is most likely that

  1. A.the demand curve is fairly inelastic
  2. B.the demand curve is fairly elastic
  3. C.the demand curve is parallel to the quantity axis
  4. D.the demand curve is positively sloped
  5. E.the price of the commodity is too high.
Show the answer and explanation

Answer: B (the demand curve is fairly elastic)

Explanation

With many substitutes, a small price rise makes buyers switch, so demand is fairly elastic.