GENERAL KNOWLEDGE

Detailed explanation-1: -The four factors that affect price elasticity of demand are (1) availability of substitutes, (2) if the good is a luxury or a necessity, (3) the proportion of income spent on the good, and (4) how much time has elapsed since the time the price changed. If income elasticity is positive, the good is normal.

Detailed explanation-2: -Factors that determine the elasticity of demand would be the availability of substitutes, the share of the good’s expense in individuals’ income, and the passage of time.

Detailed explanation-3: -Nature of commodity: A commodity for a person may be a necessity, a comfort or a luxury. i. When a commodity is a necessity like food grains, vegetables, medicines, etc., its demand is generally inelastic as it is required for human survival and its demand does not fluctuate much with change in price.

Detailed explanation-4: -The elasticity of demand refers to the degree to which demand responds to a change in an economic factor. Price is the most common economic factor used when determining elasticity. Other factors include income level and substitute availability. Elasticity measures how demand shifts when economic factors change.

Detailed explanation-5: -Nature or type of Good. The Elasticity of Demand for a good is affected by its nature. Availability of Substitutes. Price Level. Income Levels. Time Period. 11-Jan-2021