The following points highlight the seven main factors affecting the price elasticity of demand. Possibility of Deferment of Consumption 7. ADVERTISEMENTS: Elasticity of demand differs from commodity to commodity. Definition: Cross elasticity of demand can be defined as a measure of a proportionate change in the demand for goods as a result of change in the price of related goods.

Number and Variety of Uses of the Product 4. Nature of the Good 2. Factors Affecting the Price Elasticity of Demand | Economics. Factors affecting Price Elasticity of Demand: There are some factors which determine whether the demand for a good is elastic or inelastic which are as following: (1) Availability of substitutes: Availability of close substitutes is one of the most important determinants of price elasticity of demand. This is due to the fact that over a period of time, consumers get … Role of Habits 6. The association between price and quantity demanded is also called a Demand curve.Preferences and choices, which are the basics of demand, can be depicted as the functions of cost, odds, benefit and other variables. If the demand cannot be postponed, it … Article Shared By. Proportion of Income Spent on the Good 5.

Cross elasticity of demand measures the responsiveness of change in the price of one good to the quality of the other good. Implies that the price elasticity of demand largely depends on time that consumers take to adjust themselves with new prices of a product. Availability of Substitute Goods 3. Transport prices can include monetary (money) costs, plus travel time, discomfort and risk.

Another important factor affecting the demand in a bigger way is postponement of demand for a commodity. Prices are the direct, perceived costs of using a good. Price of the Good. Postponement of Demand influence Elasticity of Demand. The factors are: 1. Not only that, elasticity of de­mand of the same commodity may be different for different persons. For example, if the price of such a good rises, its buyers generally are not able to reduce its demand. Cross Elasticity of Demand. If the demand can be postponed, then the commodity will have elastic demand. The longer the period of time, higher the price elasticity of demand. Factors affecting the magnitude of price elasticity of demand.

Meaning Of Demand: Demand is the number of goods that the customers are ready and able to buy at several prices during a given time frame. The elasticity of demand for a necessary good is relatively small. These differences in elasticity of demand are due to various causes, which are discussed below: 1. The elasticity of demand for a good depends upon the nature of the good, i.e., whether the good is a necessary or a luxury good. Various factors that affect transport demands should be considered in policy analysis and planning.

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