Economics · Microeconomics
Product Zeta, a newly launched niche electronic gadget, is currently experiencing high initial sales despite a premium price. This is largely due to its innovative features and strong brand appeal among early adopters. However, market analysts predict that as more competitors enter the market with similar products, the demand for Product Zeta will become significantly more price-elastic over time. Which of the following factors, according to economic theory, would LEAST contribute to this predicted increase in price elasticity of demand for Product Zeta?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The introduction of numerous close substitute products by rival manufacturers.
- 2A shift in consumer perception, making Product Zeta increasingly regarded as a luxury item rather than a necessity.
- 3Consumers becoming more aware of alternative products and actively comparing prices over a longer period.
- 4The portion of average consumer income spent on Product Zeta remaining consistently small.✓
Correct answer
The portion of average consumer income spent on Product Zeta remaining consistently small.
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