Question

question 12
1 pts
there are very few, if any, good substitutes for motor oil. therefore...

the demand for motor oil would tend to be elastic.

the demand for motor oil would tend to respond strongly to changes in prices of other goods.

the supply of motor oil would tend to respond strongly to changes in peoples tastes for large cars relative to their tastes for small cars.

the demand for motor oil would tend to be inelastic.

Explanation:

To determine the correct answer, we analyze the concept of price elasticity of demand. A good with few substitutes has an inelastic demand because consumers have limited alternatives, so they are less responsive to price changes.

• The first option is incorrect because elastic demand requires many substitutes (consumers can switch easily).
• The second option is wrong as few substitutes mean demand won't respond strongly to other goods' prices.
• The third option is about supply and tastes for cars, which is irrelevant to motor oil's demand elasticity.
• The fourth option is correct: with few substitutes, demand for motor oil is inelastic (less responsive to price changes).

Answer:

D. the demand for motor oil would tend to be inelastic.