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Question
True or False with Reason:
The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.
True or False
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Solution
This statement is false.
Explanation:
- More alternative uses make a commodity more elastic because demand can be adjusted across different uses.
- So elasticity is directly or positively related to the number of alternative uses.
- For example, electricity has many uses and therefore has elastic demand.
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