Unformatted text preview: D. Perfectly elastic t E. Perfectly inelastic i7 Q What determines the price elasticity of demand for a product? 0 Availability of close substitutes
o Passage of time 1’06 (15500 Necessities versus luxuries -' “Elm-“:1
0 Deﬁnition of the market 0 Share of the good in the consumer’s budget Availability of close substitutes: If a product has more substitutes available, it will have more
elastic demand. If a product has fewer substitutes available, it will have less elastic demand. Passage of time: The more time that passes, the more elastic the demand for a product becomes. Luxuries versus necessities: The demand curve for a luxury is more elastic than the demand
curve for a necessity. ...
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- Spring '11