1. Determinants of the price elasticity of demand me determinants of the price e

Question

1. Determinants of the price elasticity of demand me determinants of the price elasticity of demand: The availability of close substitutes Whether the good is a necessity or a luxury How broadly you define the market The time horizon being considered demand, since consumers cannot A good without any close substitutes is likely to have relatively easily switch to a substitute good if the price of the good rises A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand? Sports car A heart valve for heart attack victims The price elasticity of demand for a good also depends on how you define the good. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between. Categories Red bell peppers Vegetables Food Most Elastic In Between Least Elastic The price elasticity of demand is also affected by the given time horizon Compared to the short-run demand for oil, the demand for oil in the long run will tend to be elastic.

Explanation / Answer

Relatively Inelastic

A heart Valve for Heart attack Victims is less Inelastic

Red Bell Peppers- Most Elastic

Vegetable- Less Elastic

Food- In Between

Less Elastic

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