Which of the following statements about price elasticity is incorrect?

The statement that price elasticity is greater for necessities than luxuries is incorrect. In general, the price elasticity of demand tends to be lower for necessities compared to luxuries. This is because necessities are essential goods that consumers will purchase even if the price increases, leading to less sensitivity to price changes—the hallmark of inelastic demand. Conversely, luxuries are not essential, and consumers can forgo purchasing them when prices rise, resulting in higher elasticity and greater sensitivity to price fluctuations.

The other statements reflect accurate concepts about price elasticity. The idea that price elasticity is less than one for inelastic demand captures the definition accurately, as inelastic demand leads to proportionately smaller changes in quantity demanded relative to price changes. The assertion that price elasticity can vary at different points along a demand curve is also true, as the elasticity of demand can change depending on the price level and quantity. Lastly, the fact that the availability of substitutes affects elasticity is a well-established principle; when close substitutes are available, consumers are more likely to change their purchasing behavior in response to price changes, leading to higher elasticity.