Question

Can you list the 'determinants of elasticity' so we have a generalized list of things that would determine the elasticity of any product?

Answer 1

Determinants of elasticity

1) Nature of goods: nature of good is first determinants of elasticity if good is luxury then its elasticity greater if goods are neccessary then its elasticity is lesser.

2) Availability of substitutes: If their is close availability of substitutes then its elasticity greater but if no close substitute of product then its elasticity if lesser.

3) Time period: Time period is also an effective determinant of elasticity of product it their is short time period then elasticity is lesser because possibility of changes in quantity is less in short run so elasticity is lesser on the other when time period is Long then elasticity is greater.

4) Price level : At high price level elasticity demand of product is higher beacuse response in quantity change is more in high price so at high price elasticity of demand is higher on the other at low price,price elasticity of demand is lesser.