Elasticity_of_demand - Economics Questions D Explain...

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Economics Questions: D. Explain whether demand would tend to be more or less elastic for each of the following three determinants of elasticity demand: 1. Availability of substitutes 2. Share of consumer income devoted to a good 3. Consumer’s time horizon E. Provide an example for each of the three determinants in part D. 1. Explain the logical impacts to business decision making that result from each of the examples you provided in part E. F. Differentiate between perfectly inelastic demand and perfectly elastic demand. 1. Illustrate the difference between the terms in part F with specific descriptions or graphs. Answer D: 1. Availability of substitutes: If close substitute of goods is available, demand will be more elastic 2. Share of consumer income devoted to a good: demand of goods which require large Share of consumer income devoted to it are more elastic. 3. Consumer’s time horizon: If consumer's time horizon is longer,demand of goods tends to be more elastic Answer E.
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