ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An elastic good is defined as one where a change in price leads to a significant shift in demand and where substitutes are available for an item, the more elastic the good will be. The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

Detailed explanation-2: -Substitutes: Price elasticity of demand is fundamentally about substitutes. If it’s easy to find a substitute product when the price of a product increases, the demand will be more elastic. If there are few or no alternatives, demand will be less elastic.

Detailed explanation-3: -The availability of alternatives or substitute goods can affect demand elasticity. 1 Hence, the demand for goods or services with many substitutes is highly price elastic; a small increase in the price levels of goods causes consumers to buy its substitutes.

Detailed explanation-4: -A flatter curve is relatively more elastic than a steeper curve. Availability of substitutes, a goods necessity, and a consumers income all affect the relative elasticity of demand.

Detailed explanation-5: -Substitutes: Price elasticity of demand is fundamentally about substitutes. If it’s easy to find a substitute product when the price of a product increases, the demand will be more elastic. If there are few or no alternatives, demand will be less elastic.