Uses and Habit Forming Commodity -price elasticity of demand:
The number of possible uses:
A commodity has high price elasticity of demand (or elastic demand) if it can be put into so many users. With such a commodity, if the price changes, the responses of quantity demanded to the price change becomes significant when changes in quantity demanded for each use are put together. For instance, a commodity such as sugar is used for direct comsumption, baking bread and cake, making jam etc. Thus,
the demand for sugar may be fairly elastic.
Habit Forming Commodity
Some commodities are habit corming while others are not.For habit forming commodities, they tend to have less elastic or inelastic demand because once the habit is formed it is abit difficult to break away from it when the price of the commodity increases even significantly. For instance, once the habit of smoking cigarettes is formed, it is difficult to break away when the price of cigarettes rise. Non-habit forming commodities tend to have more demand.