(1) Explain the factors influencing elasticity of demand.
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There are several factors that affect how elastic (or inelastic) the price elasticity of demand is, such as the availability of substitutes, the timeframe, the share of income, whether a good is a luxury vs. a necessity, and how narrowly the market is defined. We explore each of these in this video.
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Nature of the Commodity Influence Elasticity of Demand
It mainly depends or the nature of the commodity and the degree of necessity. The elasticity of demand depends on whether a commodity is necessity, comfort or luxury. ... On the other hand the demand for comforts and luxuries may not have inelastic demand.
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