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Question
What will be the effect on price elasticity of demand, if the time required to find the substitute product is more.
Options
Price elasticity will increase
Price elasticity will remain same
Price elasticity will decrease
More information required
MCQ
Solution
Price elasticity will increase
Explanation:
The price elasticity of demand varies in direct proportion to the length of time. The price elasticity will increase if the time necessary to find a substitute commodity is longer, and vice versa. This means that the elasticity for a shorter period of time is always low or even inelastic.
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