Question

a pizza restaurant in a neighborhood has many other competing pizza restaurants. what does this mean about the demand for the product?
○ it is probably elastic.
○ it is probably inelastic.
○ it is probably time - based.
○ it is probably need - based.

Explanation:

In a market with many competing pizza restaurants (a competitive market with close substitutes), if the price of one restaurant's pizza changes, consumers can easily switch to other pizza places. Demand elasticity refers to how responsive quantity demanded is to price changes. When there are many substitutes, a small price change leads to a large change in quantity demanded, so demand is elastic. Inelastic demand is when quantity demanded is not very responsive to price (e.g., for necessities with few substitutes). Time - based and need - based don't relate to the effect of competition on demand elasticity here.

Answer:

A. It is probably elastic.