Question

For which is the price elasticity of demand the greatest?

A) bread

B) A specific brand of bread

C) wheat

D) there is no reason to suspect a difference in the price elasticity of demand for the three products

Answer 1

The correct answer is 'Option B'.

The price elasticity of a specific brand of bread is likely to have the most elastic demand. This means that the percentage change in quantity demanded is more than the percentage change in price of thag good. Bread and wheat are necessary goods which will have relatively inelastic demand. The person can shift to consuming the other brand of bread if a specific brand of bread is expensive. So, the price elasticity of demand can be the greatest for a specific brand of bread among the given options. Therefore, the correct answer is 'Option B'.