Question

Consider some determinants of the price elasticity of demand: The availability of close substitutes Product's share of the consumer's total budget A good with many close substitutes is likely to have relatively demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. The price elasticity of demand for a good depends on the price relative to consumers' income. Which of the of flowing goods has the most elastic demand? Shoes Car Swing set Coffee

Answer 1

The main factors influencing a commodity's price elasticity of demand are as follows: 1. The presence of substitutes 2. The sum of consumer spending 3. The Products' Complementarity.

The main factors influencing a commodity's price elasticity of demand are as follows: 1. The presence of substitutes 2. The sum of consumer spending 3. A product's number of applications 4. The Products' Complementarity 5. Time and elasticity. The most important factor influencing price elasticity of demand is the availability of diverse kinds and quantities of substitutes for a particular commodity or service. If a commodity has close substitutes, its demand is probably elastic. The demand for such an item will be greatly diminished if its price rises because consumers will switch to similar substitutes.

With increasing substitutability, something's price elasticity of demand rises.

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