Question

analyse why different product have different price elasticities

Answer 1

Answer:

There are various reasons why different goods have different price elasticity of demand. ... This means change in price will not have much effect on quantity demand. These goods are inelastic goods. Secondly, some goods are luxuries such as cars where there is availability of many substitutes in the market.

Answer 2

The variation in price elasticities of different products are based on multiple factors such as availability of substitute goods,nature or type of the product or different use or utilization of the products etc.

Explanation:

First,elasticity of demand for any product significantly vary according to the availability of substitute goods for that particular product.Usually,the higher the availability of substitute goods for any product,the higher will be its price elasticity of demand as lower availability of brand or product options/choices will compel consumers or buyers to stick to any particular product and vise versa.Therefore,consumers will be less responsive to sensitive to the price change of that particular product due to lower product substitution or options in the market.

The price elasticity of any product also depends on its nature or type.If any product is a necessity or used on an urgent basis such as food items or medicines,it is likely going to have lower price elasticity of demand as consumers or buyers would have to purchase irrespective of their price level in the market due to their urgent or regular use.The opposite is true for the products which are luxury or not consumed on a regular or urgent basis.These products will probably have high elasticity of demand.

Now,as the number of uses of any product increases or if a product becomes multipurpose,the higher will be its price elasticity of demand and vise versa.As a product has a multiple number of usage,consumers will be more responsive to sensitive about its price change in the market and vise versa.