Question

Which of the following is false? A. Products with close substitutes have elastic demand. B. Demand for a specific brand of a product is less elastic than industry aggregate demand for the product. C. High priced products requiring a large portion of consumers’ incomes have less elastic demand. D. In the long run, demand curves become more elastic

Answer 1

Option B is False.

• The Statement that demand for a specific brand of product is less elastic than industry aggregate demand for the product is False.
• Instead the demand for a brand is more elastic than industry demand. This is because, branded goods are usually considered as luxury goods and are usually desired when customers income rise or when their prices fall.
• These branded goods may also have close substitutes which makes them more elastic than industry aggregate demand.