Answer to Question #265592 in Economics of Enterprise for Najmi

Question

List the five keys determinant of price elasticity of demand and explain how 

each determinant indicates whether demand tends to be elastic or inelastic

Answer 1

The 5 aspects affecting price elasticity of demand include price level and substitutes availability. Similarly, when a good tends to be a necessity or a luxury usually determine the price elasticity of demand. Proportion of the income that has been spent on a good, and the period that has elapsed considering the time when price was changed.