Question

Name three factors that determine a good’s or service’s elasticity.

Answer 1

Answer:

Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price.

Explanation:

Answer 2

Answer:

(1) availability of substitutes

(2) if the good is a luxury or a necessity,

(3) the proportion of income spent on the good, and

(4) how much time has elapsed since the time the price changed.