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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
Explain the effect of the following on the price elasticity of demand of a commodity:
(i) Number of substitutes
(ii) Nature of the commodity
Write Short note on the following.
Ratio method of measuring price elasticity of demand ?
Choose the correct answer :
Perfectly elastic demand curve is _________.
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 ______.
Which of the following is the most likely reason for the relatively high elasticity of bottled water?
Assertion (A): The demand for soap, salt, matches etc. is highly elastic.
Reason (R): The demand for soap, salt, matches etc. is highly inelastic because the consumer spends a very small amount of expenditure in relation to his/her income.
How does the availability of substitutes of a commodity affect its price elasticity of demand?
How does the time period affect the elasticity of demand?
Which statement correctly describes the relationship between postponement and price elasticity?
