Goods with no substitutes tend to have price elasticity that is

• A. Highly elastic demand.
• B. Inelastic demand.
• C. Unitary elasticity.
• D. Elastic demand is unpredictable.

Answer: (B)

Price elasticity of demand measures how much quantity demanded responds to a price change. When a good has no substitutes, consumers can’t easily replace it with another product. They still need to purchase it, so a price increase leads to only a small reduction in quantity demanded. This makes the elasticity magnitude less than one, which is described as inelastic demand.

Inelastic demand is common for necessities or goods with few or no close substitutes, where buyers have less flexibility to cut back on purchases. If substitutes were available, consumers could switch more easily when prices rise, making demand more elastic.