The question states that Good X has a price elasticity of demand (PED) of 0.25.

The question states that Good X has a price elasticity of demand (PED) of 0.25. Step 1: Understand Price Elasticity of Demand (PED). Price elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. Step 2: Interpret the given PED value. A PED value of 0.25 means that for every 1% change in price, the quantity demanded changes by 0.25%. Since 0 < PED < 1, the demand for Good X is inelastic. Step 3: Analyze the characteristics of inelastic demand. Inelastic demand implies that consumers are not very responsive to price changes. This typically occurs when: • The good has few close substitutes. • The good is a necessity. • The good represents a small portion of a consumer's budget. • The good is purchased out of habit. Step 4: Evaluate the given options. A. has many close substitutes: If a good has many close substitutes, consumers can easily switch to alternatives when its price changes, leading to elastic* demand (PED > 1). This contradicts the given PED of 0.25. B. has few substitutes: If a good has few substitutes, consumers have fewer alternatives, making them less responsive to price changes. This leads to inelastic* demand (PED < 1). This is consistent with the given PED of 0.25. C. is not purchased out of habit: Goods purchased out of habit often have inelastic demand because consumers continue to buy them regardless of price changes. If it's not* purchased out of habit, it might imply more elastic demand. This option is generally inconsistent with inelastic demand. D. is a luxury good: Luxury goods are typically non-essential and often have elastic* demand (PED > 1) because consumers can easily forgo them if prices rise. This contradicts the given PED of 0.25. Based on the analysis, a good with a price elasticity of demand of 0.25 (inelastic demand) is characterized by having few substitutes. The final answer is B. 3 done, 2 left today. You're making progress.