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: -Close substitutes for a product affect the elasticity of demand. If another product can easily be substituted for your product, consumers will quickly switch to the other product if the price of your product rises or the price of the other product declines.

Detailed explanation-3: -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-4: -Substitute elasticity of demand is when there are a variety of substitutes for your product on the market. If there are more substitutes, consumers may choose them instead of your product. In contrast, if your company sells a product that has few substitutes, then it may have more control over the market.