State The Factors Affecting The Price Elasticity Of Demand.
For price elasticity, the factors that would determine the value of the elasticity of demand would be the time period for decision making, the proportion of income spent on it, the of number of substitutes for the good available in the market and the income of consumers may also affect it.
Further, different goods respond differently to a change in its price. There are a number of factors which affect the elasticity of demand of a commodity. Some of these are as follows: (1) Nature of Commodity: The first and foremost determinant of the elasticity of demand is the nature of the commodity.
Factors affecting price elasticity of demand essay Ashley, but cross-price and income distributions in a smartphone is 1. Free essay questions each product is the art of demand analysis essay which when the price elasticity of demand for each.
The five main factors which determines the price elasticity of demand for a commodity are as follows: 1. The Availability of Substitutes 2. The Proportion of Consumer’s Income Spent on a Commodity 3. The Number of Uses of a Commodity 4. Complementarity between Goods 5. Time and Elasticity. 1. The Availability of Substitutes.
The factors that determine the price elasticity of demand for a good are: substitute goods - if a good has many substitutes, a change in its price will have a major impact on its demand. Consumers will turn to the substitute goods instead of buying a good that suddenly has become more expensive.
If the elasticity had been greater than one, the product would have been price elastic. The factors that affect the price elasticity of demand are: 1. The number of substitutes available. 3 pages, 1276 words. The Essay on Disposable Income Price Demand Supply.
When the price elasticity of demand is exactly 1, the demand is directly linked to the price and this is known as unit elastic demand. If the price elasticity of demand is found to be less than 1, this would indicate that the demand is not affected by changes in price. Whether or not the price for the product is high or low, the demand remains unchanged.