Generally, a seller can charge a higher price for a product when:

• A. the demand for the product is perfectly elastic
• B. there are many close substitutes available
• C. the demand for the product is relatively inelastic
• D. the supply of the product is perfectly elastic

Answer: (C)

Verified step by step guidance

1. Understand the concept of price elasticity of demand, which measures how much the quantity demanded of a product changes in response to a change in its price.
2. Recall that when demand is perfectly elastic, consumers will only buy at one price, so the seller cannot charge a higher price without losing all customers.
3. Recognize that when there are many close substitutes, consumers can easily switch to alternatives if the price rises, making demand more elastic and limiting the seller's ability to increase price.
4. Know that when demand is relatively inelastic, consumers are less sensitive to price changes, so the seller can raise the price without a large drop in quantity demanded, allowing for higher prices.
5. Understand that supply elasticity affects how quantity supplied responds to price changes, but it does not directly determine the maximum price a seller can charge; thus, perfectly elastic supply does not imply higher prices.