There are plenty of factors affecting elasticity of demand including climate of the area. Other factors that effect elasticity of demand include supply and group of people buying.
The price elasticity of demand for a particular demand curve is influenced by the following factors:
Essential or non-essential good, Availability of substitutes, Time. when large numbers of close substitutes exist demand for that product tends to be elastic as consumers have alternatives. >Also, don't forget "the proportion of the price of the good (p) relative to income (y)".
Good with close substitutes tend to have elastic demand curves. The demand for good ''A'' is ''price sensitive'' to changes in the price of good ''B'', because they both satisfy the same want. The demand for one brand of butter will vary, if another brand is put on ''special'' at your local supermarket.
''Necessities'' tend to have inelastic demand curves. If households see a good as essential to daily living, demand for the good will be ''price insensitive''. For example, if the price of milk rose by 50 cents a litre, demand for milk would not change greatly. All households want milk.
Luxuries on the other hand tend to have elastic demand curves. If soft drinks are put on ''special'' at your local supermarket, and their price is lowered, demand for them will rise markedly. Part of this ''necessities'' versus ''luxuries'' distinction is based on the cost of the item. Many necessities are inexpensive: they have low prices - a loaf of bread, a litre of milk, a box of matches, all only cost a very small part of your available disposable income. An increase in the price of a litre of milk of 50 cents is still ''small change'' for many consumers, and they will continue to demand milk at the same levels as they did before the price rise. Luxuries on the other hand can be very expensive and cost a large part of your available disposable income. You may decide not to buy that French champagne to celebrate a birthday, if the price rises from $30 to $32. The price of $30 is already a large enough disincentive.
Some goods are habit forming, or addictive. Cigarettes are a clear example. Once ''hooked'', the average smoker will continue to pay more and more for cigarettes, as governments increase taxes on tobacco. Very few smokers give up smoking because of price increases; most give up for health reasons.
Three of the factors on elasticity of demand are necessity vs. luxury, availability of substitutes, and relative importance.
Substitutes
The income factor affecting income elasticity of demand is weather or not goods are necessities of luxury.
Demand, perceived value, overall reputation
An increase in population
Increase in the population.
Elasticity of demand affects managerial decisions because the demand of a product changes with the wrong business decision. Managers must be careful about what they choose to do with their products.
There are plenty of factors affecting elasticity of demand including climate of the area. Other factors that effect elasticity of demand include supply and group of people buying.
The income factor affecting income elasticity of demand is weather or not goods are necessities of luxury.
Demand, perceived value, overall reputation
An increase in population
Increase in the population.
Elasticity of demand will help managers determine what behaviors affect customer's buying behavior. Price elasticity will tell managers whether they can change the price of products or not.
Elasticity of demand affects managerial decisions because the demand of a product changes with the wrong business decision. Managers must be careful about what they choose to do with their products.
Because elasticity means when the demand is changing. a subsitute consumer in choice of theory. the substiture affects elasticity is it changes over time. substitute is choice and elasticity is demand. put those together and you have a fair deal with your money.
Because elasticity means when the demand is changing. a subsitute consumer in choice of theory. the substiture affects elasticity is it changes over time. substitute is choice and elasticity is demand. put those together and you have a fair deal with your money.
1.degree of necessity 2.peak and off-peak demand
1)price elasticity of demand 2)income elasticity of demand 3)cross elasticity of demand
Very good answer here: http://tutor2u.net/economics/content/topics/elasticity/elastic.htm