Range of substitute available
Joint demand
Proportion of income spent on the commodity
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All of the above.
The elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
The elasticity of demand is affected by a number of factors, including the following:
- The range of substitutes available: The more substitutes there are for a good, the more elastic the demand will be. This is because consumers will be more likely to switch to a substitute if the price of the good increases.
- Joint demand: Joint demand occurs when two goods are used together, such as gasoline and cars. In this case, the demand for one good will be affected by the price of the other good. For example, if the price of gasoline increases, the demand for cars will decrease.
- Proportion of income spent on the commodity: The more of a person’s income they spend on a good, the more inelastic the demand will be. This is because people are less likely to give up on goods that they spend a lot of money on, even if the price increases.
In conclusion, the elasticity of demand is affected by a number of factors, including the range of substitutes available, joint demand, and the proportion of income spent on the commodity.