Factors Affecting Elasticity

What is price elasticity of demand?

• Price elasticity of demand is a term used to describe the relationship between price and quantity demanded.

• Price elasticity of demand is a measure of how much the quantity supplied of a good changes in response to a change in its price.

• Price elasticity of demand is a measure of how much the quantity demanded of a good changes in response to a change in its price.

• Price elasticity of demand measures the supply of a good in response to a change in its price.

Explain the concept of elastic demand.

• Elastic demand is when the quantity demanded remains constant regardless of price changes.

• Elastic demand occurs when the percentage change in quantity demanded is greater than the percentage change in price.

• Elastic demand occurs when the percentage change in price is greater than the percentage change in quantity demanded.

• Elastic demand is only applicable to luxury goods.

Describe the factors that influence the elasticity of demand.

• Brand popularity, weather conditions, consumer preferences, advertising effectiveness

• Geographical location, packaging design, raw material availability, social media influence

• Government regulations, production costs, technological advancements, market competition

• Availability of substitutes, necessity of the good, proportion of income spent on the good, time period considered, definition of the market

How does the availability of substitutes affect elasticity of demand?

• Availability of substitutes increases elasticity of demand.

• Availability of substitutes only affects inelastic demand.

• Availability of substitutes decreases elasticity of demand.

• Availability of substitutes has no impact on elasticity of demand.

Discuss the impact of necessity goods on elasticity of demand.

• Necessity goods have no impact on elasticity of demand.

• Necessity goods have a low elasticity of demand.

• Necessity goods have a high elasticity of demand.

• Necessity goods have a negative elasticity of demand.

What role does time play in determining elasticity of demand?

• Time has no impact on elasticity of demand

• Time increases the price of goods affecting elasticity

• Time decreases the number of substitutes impacting elasticity

• Time allows consumers to adjust their behavior and preferences, affecting the elasticity of demand.

Explain the relationship between price and quantity demanded in elastic demand.

• Price and quantity demanded have a direct relationship in elastic demand.

• Price has no impact on quantity demanded in elastic demand.

• Quantity demanded increases as price increases in elastic demand.

• Price and quantity demanded have an inverse relationship in elastic demand.

How does the proportion of income spent on a good affect elasticity of demand?

• The proportion of income spent on a good affects elasticity of demand by influencing how sensitive consumers are to price changes.

• Elasticity of demand is solely determined by the price of the good.

• Higher proportion of income spent on a good leads to lower elasticity of demand.

• The proportion of income spent on a good has no impact on elasticity of demand.

Discuss the relationship between luxury goods and elasticity of demand.

• The relationship between luxury goods and elasticity of demand is that luxury goods usually have a high elasticity of demand.

• There is no relationship between luxury goods and elasticity of demand

• Luxury goods have a low elasticity of demand

• Luxury goods are always perfectly elastic

What is the impact of habit-forming goods on elasticity of demand?

• Habit-forming goods always lead to perfectly elastic demand.

• Habit-forming goods typically have lower elasticity of demand.

• Habit-forming goods have no impact on elasticity of demand.

• Habit-forming goods usually have higher elasticity of demand.