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Unformatted text preview: more products more efficiently, which results in a decline in prices. Even with the increases in population and incomes, the demand stays relatively the same. 2.2) The determinants of the price elasticity of demand are availability of close substitutes, passage of time, luxuries versus necessities, definition of the market, and the share of the good in the consumers budget. Of these determinants, the availability of close substitutes is the most important because how consumers react to a change in the price of a product depends on what alternatives they have. 2.3) Milk Inelastic due to alternatives not really available Frozen cheese pizza Elastic due to many substitutes available Cola Elastic due to many substitutes available Prescription medicines Inelastic limited availability of alternatives...
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- Fall '10
- Price Elasticity