Explain how the availability of substitutes affects demand ...

[rachel9]

Explain how the availability of substitutes affects demand elasticity.
 
  What will be an ideal response?

Question 2

National income equals gross national product minus
 
  A) inventories. B) changes in inventories.
  C) depreciation. D) imports.

[maaaaaaaaaa]

Answer to Question 1

Typically the more substitutes that are available for a given product the more price elastic that product will become. That is, consumers will likely be more sensitive to a given price change. By contrast, in markets where there are few or poor quality substitutes this will likely lead to be more price inelastic because of the smaller number of choices available. In this case consumers are likely to be less sensitive to a given price change.

Answer to Question 2

C

[rachel9]

Excellent

[yeungji]

Thanks for the timely response, appreciate it