Question

Apply your knowledge of the three determinants of price elasticity of demand and select one of the following products that has the lowest price elasticity of demand.

Apples sold by farmer A at a farmer's market. There are 20 other fruit stands that sell apples at this farmer's market.

Gasoline sold at various gas stations in Maryland during a 5 year period of time (the elasticity is calculated over the 5 year period).

Diamonds sold by jeweler C in a mall that has 4 other jewelers selling similar jewelry.

Houses sold by builder D in a slow and competitive housing market.

Gasoline sold by gasoline station B on the corner of main street in well-populated Pleasantville. There are no other gas stations in Pleasantville.

Answer 1

"D"

Gasoline sold by gasoline station B on the corner of main street in well-populated Pleasantville. There are no other gas stations in Pleasantville.

This will be least price elastic because he is the only seller of the good that doesn't have any close substitute.