O-LevelEconomicsThe allocation of resources2281/11 · May/June 2023 · Q71 Mark

What is the most likely cause of a product having a price elasticity of demand greater than one?

AThe product has a close substitute.

BThe product is a habit-forming good.

CThe product is a necessity.

DThe product requires only a small proportion of consumer income.

✓ Correct answer

A: The product has a close substitute.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2023 Paper 1 Variant 1, question 7.

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