Question

Which of the following influence price elasticity of demand?

Options

• Nature of the commodity.

• Income level.

• ability of substitutes.

• All of these.

Answer 1

All of these.

Explanation:

Elasticity of Demand Elasticity is determined by a number of factors.

(i) Objective Factors:

1. Existence of substitutes
2. Nature of commodity
3. Postponement of consumption, and
4. Joint demand
5. Alternative uses of a commodity.

(ii) Subjective Factors:

1. Change in income of consumers
2. Habits of consumers
3. Standard of living of people
4. Class of buyers
5. Share in total expenditure

(iii) Social Factors:

1. Rationing System
2. Distribution of National Income

(iv) Price Factors:

1. Effect of time element
2. Genenal price level