Question

(a) Please state which of the defined markets will have a demand that is more Inelastic:...

(a) Please state which of the defined markets will have a demand that is more Inelastic:

The market for hamburgers sold at Burger King restaurants only or the market for hamburgers sold at all restaurants in Southern California together.

(b) Please explain your answer.

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Answer #1

(a) The market for hamburgers sold at all restaurants in Southern California together will have more inelastic demand.

(b) The broader (narrower) the scope of a product's definition, the less (more) the number of substitutes available to consumers, therefore the more inelastic (elastic) the demand. Since the market for hamburgers sold at all restaurants in Southern California together is more broadly defined than the market for hamburgers sold at Burger King restaurants only, the market for hamburgers sold at all restaurants in Southern California together will have more inelastic demand.

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