Answer:
The larger the number of substitutes and the greater the price elasticity of demand.
Explanation:
Price elasticity of demand can be used to explain a case of this type where it shows the relationship between price and quantity demanded and provides a precise calculation of the effect of a change in price on quantity demanded.
The degree of response of quantity demanded to a change in price can vary considerably. The key benchmark for measuring elasticity is whether the co-efficient is greater or less than proportionate. If quantity demanded changes proportionately, then the value of PED is 1, which is called ‘unit elasticity'.
