How is the price elasticity of demand fo a commondity affected by the number of its substitutes ? Explain.

How is the price elasticity of demand fo a commondity affected by the

1.	How is the price elasticity of demand fo a commondity affected by the number of its substitutes ? Explain.
Answer» Solution :If CLOSE substitutes for a particular good are available in the market, then the demand for the good WOULD be relatively more elastic. For example, since tea, a close SUBSTITUTE for coffee, is available in the market, a rise in the price of coffee would RESULT in a considerable fall in its demand and a consequent rise in the demand for tea.