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प्रश्न
Explain any two factors that affect the price elasticity of demand. Give suitable examples.
Mention two factors affecting the price elasticity of demand.
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उत्तर
Factors affecting the price elasticity of demand are:
- Availability of substitutes: The price of a good falls in relation to its substitute. Consumers can easily switch from one good to another even if there is only a small change in price and so its demand will increase. Hence the price elasticity of demand for commodities having close substitutes is relatively high.
- Nature of good: A good can be necessary, comfort or luxury good as per the preferences of the consumers. The demand for necessary good does not fluctuate with the price as these goods are basic for day-to-day life. Hence it is inelastic. The demand for comfort and luxury goods are elastic as the consumption of these goods can be postponed.
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संबंधित प्रश्न
A 5 percent fall in the price of a good raises its demand from 300 units to 318 units. Calculate its price elasticity of demand.
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The government wants to reduce the consumption of good by 10%. The price elasticity of demand for elasticity is -0.4. The government should raise the price of elasticity by ______.
The nature of a commodity determines its price elasticity of demand. Explain.
State 3 factors which affect price elasticity of demand.
