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States the determinants of elasticity

States the determinants of elasticity?

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Elasticity of demand changes from product to product, market to market and time to time. It is due to affect of various factors as given below:

1. Nature of commodity: Demand for essential goods (as salt and rice and many more) are inelastic. Demands for comfort and luxury goods are elastic.

2. Availability/range of substitutes: A commodity against that lot of substitutes are available, the demand for which is elastic. However, the goods that have no substitutes, demand is inelastic.

3. Extent /variety of uses: Commodities consisting of a variety of uses have a comparatively elastic demand. For example: Demand for steel and electricity.

4. Postponement/urgency of demand: When the consumption of a commodity can be post pond, then it will have elastic demand. Urgent commodity has inelastic demand.

5. Income level: income level also affects the elasticity. For example: Rich man will not curtail the consumption quantity of milk and fruit, even though their price rises, but a poor man will not follow this.

6. Amount of money spends upon the commodity: here an individual spends simply a small portion of his income on the commodity and the price change doesn’t materially influence the demand for the commodity, as well as the demand is inelastic. As Match box, salt and so forth.

7. Durability of commodity: When the commodity is durable or repairable at a substantially less amount (For example: Shoes), the demand for which is elastic.

8. Purchase frequency of a product/time: When the frequency of purchase of a product is very high then the demand is probably to be more price elastic.

9. Range of Prices: When the products at very high price or at very low price consisting of inelastic demand because a slight change in price will not influence the quantity demand.

10. Others: Demand for complimentary goods, the habit of consumers and distribution of income as well as wealth in the society and so forth, are other significant factors affecting elasticity.

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