Question

explain any two factor that affect ped

Answer 1

Factor that affecting Price elasticity of demand (ped)

1)':-Availibility of substitutes

The greater the number of close substitutes a good has, the more price elastic its demand. Consumers will change to another option if the price rises. The demand for hoods with few substitites are inelastic. We can generalise and say that the price elasticity of a brand is greater than the lrice elasticity for the class of good.

2) :-Necessity

Essentials that are needed and prioritized by the larger community over luxury items that consume a higher level of income. Essentials are bread, milk and rice. Petrol and water are also classified as necessities. Necessities are inelastic and insenesitive to price. Habit forming and addictive goods such as tobacco and alcohol are highly price inelastic because they are perceived necessities by people who use them.

3) :-Proportion of income spent

If consumers have time to repsond to a decision, then ddemand will be more elastic. Most commoditities will be relatively inelastic because consumers do not have time to adjust gheir consumption and find substitute products. As the time period increases though, it becomes easier to change consumptiom patterns and so demand becomes more elastic.

4) :-Time

Exepensive goods are relatively elastic.

If the price of a plasma tv was to decrease 50% from $10000 to $5000 there would be a significant increase in demand.

Cheaper goods are relatively inelastic.

If the price of matches was to decrease from $1 to 50c there wouldnt be a significant increase in denand.

If you are satisfied with answer plz upvote thank you