Question

Explain availability of close substitute as a determinant of own price elasticity.

Answer 1

Availability of Close Substitute as a Determinant of Own Price Elasticity.

           If a commodity close substitute is available it demand will be elastic. If the price of such a commodity rises the people will shift to its close substitutes. As a result the demand for that commodity will greatly decline. Hence the greater the possibility of substitution the greater the price elasticity of demand for it.

           References

Jerelin R ;<http://www.economicsdiscussion.net/price-elasticity-of-demand/determinants-price-elasticty-of-de...>