Human wants are unlimited. The resources at the disposal of human beings are limited. Hence people are bound to exercise their choice. The satisfaction of human wants is linked with the production of goods and services and their pricing process.
What factors influence a change in demand elasticity? By Mary Hall Updated January 17, — 9: Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor. There are many factors that influence a change in demand elasticity.
These factors include price, income level and availability of substitutes. Price One factor that can affect demand elasticity of a good or service is its price level. For example, the change in the price level for a luxury car can cause a substantial change in the quantity demanded.
Income Level Also know as the income effectthe income level of a population also influences the demand elasticity of a good or service.
The shift in the income level of the majority of a population causes luxury items to be more elastic. Suppose there is a decrease in the average income level of an entire economy; luxury items such as luxury cars and flat-screen televisions experience a high elasticity of demand.
Many people opt to save money rather than splurge on luxury items during an economic downturn.
Substitute Availability If there is a readily available substitute for a good or service, the substitute affects the elasticity of demand of that good or service.
The availability of a substitute makes demand for a good or service sensitive to price changes. For example, suppose the price level of Florida oranges increases due to a cold front that passes through the state.
A close substitute for Florida oranges is California oranges.
A rise in the price of Florida oranges encourages consumers to buy California oranges. For related reading, see:Article shared by. There are several factors which influence the quantity demanded of a monstermanfilm.comant among them are the price of the commodity, the price of related commodities, and income of the consumer, taste and preference of consumers, size of population and various other factors.
Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor.
There are many factors that influence a change in demand elasticity. The demand changes as a result of changes in price, other factors determining it being held constant. We shall explain below in detail how these other factors determine market demand for a commodity. These other factors determine the position or level of demand curve of a commodity.
Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor. There are many factors that influence a change in demand elasticity. From the e-Activity, compare the primary individual factors that influence demand, and explain the significant ways in which each affects the demand curve.
Provide at least one (1) example of these factors to support your rationale.-The primary factors that influence demand are: the price of other goods, the income of the consumer, consumer taste and expectations%(7).
What other factors not mentioned in the article might also influence the price elasticity of demand for cigarettes? According to the above discussion, the factor influence the price elasticity demand for cigarettes is income level.