Explain by giving examples, how do the following determine price elasticity of demand: 1. Nature of good 2. Availability of substitutes 3. Habit of consumers 4. Postponement of use
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- Demand for a commodity with large number of substitutes will be more elastic. The reason is that even a small rise in its prices will induce the buyers to go for its substitutes. For example, a rise in the price of Pepsi encourages buyers to buy Coke and vice-versa.
- The reason is that even a small rise in its prices will induce the buyers to go for its substitutes. For example, a rise in the price of Pepsi encourages buyers to buy Coke and vice-versa
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