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

Factors influencing price elasticity of demand include:
- Availability of close substitutes (A)
- Good's classification (necessity or luxury) (B)
- Market definition (C)
- Time horizon (D)