📚 Learning Guide
Elasticity Formulas and Relationships
easy

Which of the following is NOT a determinant of price elasticity of demand?

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Learning Path

Question & Answer
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3
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Choose the Best Answer

A

Availability of substitutes

B

Necessity vs luxury

C

Time period

D

Consumer's income level

Understanding the Answer

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Answer

Price elasticity of demand measures how much the quantity demanded of a good changes when its price changes. There are several factors that can affect this elasticity, such as the availability of substitutes, the necessity of the product, and how much of a person's income is spent on it. However, one factor that is NOT a determinant is the time of year. For example, if the price of ice cream rises in summer, people might still buy it because it's a popular treat, showing that time of year does not directly affect whether demand is elastic or inelastic. Understanding these determinants helps businesses and economists predict how changes in price will affect sales.

Detailed Explanation

Income level does not directly affect how much demand changes when prices change. Other options are incorrect because Many think substitutes don't matter, but they do; Some believe this isn't important, but it is.

Key Concepts

determinants of elasticity
Topic

Elasticity Formulas and Relationships

Difficulty

easy level question

Cognitive Level

understand

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