Question

What are the major determinants of price elasticity of demand?Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.SubstitutabilityProportion of incomeLuxuries versus necessitiesTimeExcise taxesAvailability of complementary and substitute goodsInferior goods and normal goods

Answer 1

Answer:

The correct answers are letters "A", "B", "C", and "D".

Explanation:

Elasticity is a feature of goods or services by which their demand or supply is subject to changes according to price changes. The price elasticity of demand is calculated by dividing the percentage in the change of quantity demanded by the change in price. Results equal to or higher than 1 imply the product is elastic while results lower than 1 imply the product is inelastic.

Demand elasticity is determined by substitutability -more substitutes mean more elasticity, the proportion of income -as more is spent on a product more elastic it will be, luxury -the more luxury the more elastic, and time -longer production time means more elasticity.