Assume that, over time, engineers develop new residential furnaces tha

Assume that, over time, engineers develop new residential furnaces that can run on different types of fuels, e.g., natural gas, electricity, propane, and fuel oil, simply by flipping a switch on the furnace.

How would this technological change affect the price elasticity of demand for natural gas? Why?

ANSWER

The price elasticity of demand for natural gas should increase as a result of an increase in the number of available substitutes for natural gas as the energy source for operating a furnace.