Explain the factors affecting the price elasticity of demand
Answers
Answer:
Five factors affecting the elasticity of demand are:
1) Nature of commodity: Necessaries have less than unitary elastic demand whereas, luxuries have more than unitary elastic demand.
2) Time period: Demand is inelastic in short period but elastic in long period.
3) Price level: elasticity of demand will be high at higher level of the price of the commodity and low at lower level of price.
4) Diversity of uses: Commodities that can be put to variety uses have elastic demand. On the other hand, if a commodity has only few uses, its demand is likely to be less elastic.5) Habit of consumers: Goods to which consumers become habitual will have inelastic demand.
Explanation:
hope it helps you
Price of the Product. There is an inverse (negative) relationship between the price of a product and the amount of that product consumers are willing and able to buy. ...
The Consumer's Income. ...
The Price of Related Goods. ...
The Tastes and Preferences of Consumers. ...
The Consumer's Expectations. ...
The Number of Consumers in the Market.