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प्रश्न
Discuss any three/ four factors determining price elasticity of demand.
उत्तर
Four Factors Affecting Price Elasticity of Demand
- Nature of the goods: More necessary the good for a consumer, less elastic is the demand for the good. This is because it is difficult to give up the consumption of a necessary good.
- Number of substitutes: More the number of close substitutes of a good available in the market, higher is the price elasticity of that good. It is because a consumer can easily shift from one substitute to another in case of a price change.
- Number of uses: More the number of uses of a good, more likely is the demand of that good price elastic.
- Proportion of income spent: The demand of a good will be price elastic if proportion of income spent on that good is large. It is because the total expenditure on the good changes considerably.
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