The price elasticity for butter is fairly high (in absolute value). Which of the
ID: 1190465 • Letter: T
Question
The price elasticity for butter is fairly high (in absolute value). Which of the following is among the reasons why its demand is so elastic?
Butter is a broad market category that encompasses several specific brands and products.
Butter purchases are a small portion of any consumer's total spending.
The amount of butter dairies produce cannot change quickly in response to price movements.
Butter has close substitutes, namely shortening, yogurt, and especially margarine.
Butter is a broad market category that encompasses several specific brands and products.
Butter purchases are a small portion of any consumer's total spending.
The amount of butter dairies produce cannot change quickly in response to price movements.
Butter has close substitutes, namely shortening, yogurt, and especially margarine.
Explanation / Answer
Answer is : Butter purchases are a small portion of any consumer's total spending.
Explanation : Elastic demand means that demand for a product is sensitive to price changes. For example, if the selling price of a product is increased, there will be fewer units sold. If the selling price of a product decreases, there will be an increase in the number of units sold.
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