Ex Nihilo Dutluk: Determinants of the price elasticity of demand: 1) Is there an available substitute?: Goods with close substitutes have more elastic demand. 2) Is it a luxury or necessity?: Necessities have inelastic demand, luxuries have elastic demand. 3) Weight of the good's cost in the consumers' budget: Goods that represent a relatively small portion of our total budget tend to have inelastic demand. 4) Time period: Price elasticity of demand is higher in the long run because substitute availability increases in the long run.

Determinants of the price elasticity of demand: 1) Is there an available substitute?: Goods with close substitutes have more elastic demand. 2) Is it a luxury or necessity?: Necessities have inelastic demand, luxuries have elastic demand. 3) Weight of the good's cost in the consumers' budget: Goods that represent a relatively small portion of our total budget tend to have inelastic demand. 4) Time period: Price elasticity of demand is higher in the long run because substitute availability increases in the long run.

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Introduction to Economics I Ahmet Tiryaki

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Ex Nihilo Dutluk