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1. Number of Substitute Products - the greater the number of substitute products, the greater is its own price elasticity of demand.
2. Price of Product Relative to consumers income - the greater the price of product relative to consumers income the greater is it Price Elasticity.
3. Nature of Goods - whether it is luxury good or necessity goods.
4. Passage of Time - the longer the time lapsed the greater Price Elasticity.
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What is the determinants of price elasticity of demand?
the major determinants of price elasticity of demand Use own your own help and VU handouts, and listen to VU lecture carefully
Meaning of elasticity?
It measures the sensitivity of one variable with respect to another, e.g. own price elasticity of demand measures the sensitivity of demand for a commodity with respect to its own price.
Explain elasticity of demand in your own words?
It could mean quite a few things. There is Income Elasticity of Demand, Price Elasticity of Demand. etc. Price Elasticity of Demand is the most popular, and is what people generally are referring to when they make incomplete statements like this. Price elasticity of demand, according to my understanding is the percentage change in demand due to a percentage change in price (or the prefix to the "elasticity of demand" statement). Caution must be taken however in determining this percentage change as the base value in the computation may, and usually is the average price of the good prior to the change, and not just the last price before the change. Ask your examiner what the requirements are, before you answer the question.
How is elasticity of supply related to elasticity of demand?
Elasticity of supply refers to the responsiveness of guantity supplied of a commodity to changes in its own price. And the formulafor measuring elasticity of supply percentagechange in quantity supplied/ %change in price
How income elasticity own price and cross price elasticity are related?
According to the total expenditure method; Ep<1 Price of X increases then the expenditure on X increases. Thus the expenditure and demand on Y decreases. Cross price elasticity of X and Y i s negative, therefore they are compliments. Now Taking Ep>1...we can find out the relation of substitutes. Threfore own price and cross price elasticity is not totally independent of one another.
What is the determinants of price elasticity of demand?
the major determinants of price elasticity of demand Use own your own help and VU handouts, and listen to VU lecture carefully
Meaning of elasticity?
It measures the sensitivity of one variable with respect to another, e.g. own price elasticity of demand measures the sensitivity of demand for a commodity with respect to its own price.
Explain elasticity of demand in your own words?
It could mean quite a few things. There is Income Elasticity of Demand, Price Elasticity of Demand. etc. Price Elasticity of Demand is the most popular, and is what people generally are referring to when they make incomplete statements like this. Price elasticity of demand, according to my understanding is the percentage change in demand due to a percentage change in price (or the prefix to the "elasticity of demand" statement). Caution must be taken however in determining this percentage change as the base value in the computation may, and usually is the average price of the good prior to the change, and not just the last price before the change. Ask your examiner what the requirements are, before you answer the question.
How is elasticity of supply related to elasticity of demand?
Elasticity of supply refers to the responsiveness of guantity supplied of a commodity to changes in its own price. And the formulafor measuring elasticity of supply percentagechange in quantity supplied/ %change in price
How income elasticity own price and cross price elasticity are related?
According to the total expenditure method; Ep<1 Price of X increases then the expenditure on X increases. Thus the expenditure and demand on Y decreases. Cross price elasticity of X and Y i s negative, therefore they are compliments. Now Taking Ep>1...we can find out the relation of substitutes. Threfore own price and cross price elasticity is not totally independent of one another.
If the own price elasticity of demand for paper book is -2 how will a 4 percent decrease in the price of paper book affect your overall revenues from both paper books and ebooks sales?
If the own price elasticity of demand for paper books is -2, a 4% decrease in the price is expected to increase the quantity demanded by 8%. However, since demand for ebooks is not affected by the price change in paper books, the overall increase in revenue will depend on the relative price elasticities of demand for paper books and ebooks. If the cross-price elasticity between paper books and ebooks is positive, the overall revenue could increase as the increase in paper book sales may positively impact ebook sales.
What is the most important determinant of price elasticity of demand?
The price elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. The value illustrates if the good is relatively elastic (PED is greater than 1) or relatively inelastic (PED is less than 1). A good's PED is determined by numerous factors, these include:Number of substitutes: the larger the number of close substitutes for the good then the easier the household can shift to alternative goods if the price increases. Generally, the larger the number of close substitutes, the more elastic the price elasticity of demand.Degree of necessity: If the good is a necessity item then the demand is unlikely to change for a given change in price. This implies that necessity goods have inelastic price elasticities of demand.Price of the good as a proportion of income: It can be argued that goods that account for a large proportion of disposable income tend to be elastic. This is due to consumers being more aware of small changes in price of expensive goods compared to small changes in the price of inexpensive goods.The following example illustrates how to determine the price elasticity of demand for a good. The price elasticity of demand for supermarket own produced strawberry jam is likely to be elastic. This is because there are a very large number of close substitutes (both in jams and other preserves), and the good is not a necessity item. Therefore, consumers can and will easily respond to a change in price.
What are the Factors of determing price elastic of demand?
Factors affecting demand include the good's own price, the price of related goods, personal disposable income, consumer tastes and preferences, consumer expectations about future prices and income, and the nature of the good.All of these factors work together to determine the buyer's demand curve.The market demand curve is the horizontal sum of individual buyers' demand curves. Aggregation introduces three additional non-price determinants of demand: the number of consumers; the distribution of tastes among the consumers; and the distribution of incomes among consumers of different tastes.Factors that affect individual demand can also affect market demand, but net effects must also be considered.
When do you move along demand curve?
the good's own price is changing.
What is the price of zucchini?
I grow my own so they come free. However, the point is that there is no fixed price for a zucchini, the price will be determined by the forces of supply and demand.
How does supply and demand affect pricing?
If supply is greater then the demand then the price is lower but if the demand is higher then the supply then the price is higher due to rarity. :)
How do you explain supply and demand?
DEMAND- Demand means the quantity of a commodity or service that a consumer is willing to by at given price,place and time. There are three elements of demand: 1.price of a commodity 2. quantity demanded 3.a specific time and place There are many types of demand,some of them are: price demand,income demand,cross demand or joint demand,composite demand,individual demand,market demand,etc. Law Of Demand: It explains the inverse relationship between the price and quantity demanded of a commodity. It states that other things remain constant,quantity demand of a commodity increases when its price declines and vice-versa. The other things which remain constant are income of consumers,price of relatedgoods,consumer taste and prefrences,etc. Demand curve always slopes downward due to law of demand. SUPPLY- Supply refers to the quantity of a commodity offered for sale at a given price,place[market] and time. Elements of supply- 1.It is a desired quantity,how much the producers are willing to sell not howmuch they actually sells. 2.price 3.market Law of Supply- It shows the direct relationship between price f a commodity andts supply. It statestht other things be equl,the supply of a commodity increases wih the increase in its price an vice-versa. Determinants of supply are: number of producers,taxes and subidies,natural factors,uture expectations regarding price. The supply curve is upward sloping because of the law of supply.
