Determinants Of Elasticity Of Demands.
1.Consumer Income:
The income of a consumer may also affects the elasticity of demand. For a consumer with high income, the elasticity of demand would not affect to that extent as it effects the consumers with lower incomes.
For Ex: If the prices of oil/petroleum products goes up, it would effect largely to the consumers with lower income but would not effect that much to rich class.
2.Amount Of Money Spent:
The price of a particular product may also effect the elasticity of demand. For a product with less value, the elasticity of demand would not effect whereas with a huge value product it may effect massively.
For Ex: If price of a pen increases from Rs.8 to Rs.10 its demand may still be same, Similarly if the price of a car increases from Rs.7lakhs to Rs 9lakhs its demand might go down.
3.Price Of Substitutes.
The elasticity of demands also depends on the substitutes available in the market
For Ex; If the price of milk from a dairy is comparatively high to others, the consumer may turn to other dairy as a substitute stating that the prices are too high. Hence the demand of the first dairy may reduce.
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