How does the availability of close substitutes of a good affected the – InterviewSolution

1.	How does the availability of close substitutes of a good affected the price elasticity of demand of that good? Explain
Answer» Availability of substitutes makes it possible for the consumer to switch from one commodity to the other. Thus, if price of coffee increases, the consumers may switch over to tea, implying greater possibility of change in demand in response to change in price. Hence, elasticity of demand is high in case of good with close substitutes.

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