Question

Which of the following are the determinants for the price elasticity of demand?
(A) Availability of close substitutes
(B) Necessities versus Luxuries
(C) Definition of the market
(D) Time Horizon

• A. (A), (B) and (C) only.
• B. (A), (B) and (D) only.
• C. (A), (B), (C) and (D).
• D. (B), (C) and (D) only.

Hint:

Price elasticity is influenced by substitutes, necessity, market definition, and time horizon.

Answer 1

The Correct Option is C

Price elasticity of demand is determined by:
- The availability of close substitutes (A)
- Whether the good is a necessity or luxury (B)
- Definition of the market (C)
- Time Horizon (D)