Answer :
Final answer:
The relative price elasticity of demand for brown leather hiking boots depends on the product group. If brown leather hiking boots have a broader product group, the demand would be more price elastic. However, if brown leather hiking boots have a narrower product group, the demand would be less price elastic.
Explanation:
When predicting the relative price elasticity of demand for brown leather hiking boots, we need to consider the product group of brown leather hiking boots compared to the product group of hiking boots in general. Price elasticity of demand measures the responsiveness of the quantity demanded of a product to a change in its price. It is determined by factors such as the availability of substitutes, the necessity of the product, and the proportion of income spent on the product.
If brown leather hiking boots have a broader product group, meaning there are more substitutes and alternatives available, the demand for brown leather hiking boots would be more price elastic. This is because consumers have more options to choose from and can easily switch to other types of hiking boots if the price of brown leather hiking boots increases.
On the other hand, if brown leather hiking boots have a narrower product group, with fewer substitutes and alternatives, the demand would be less price elastic. In this case, consumers may be more willing to pay a higher price for brown leather hiking boots as there are limited alternatives available.
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