Which of the following is an important determinant of the price elasticity of demand for a commodity?
A) the method of calculating the coefficient of elasticity
B) the importance of the commodity in consumers' budgets
C) the number of buyers of the commodity
D) the number of sellers of the commodity
E) the cost of producing the commodity

Question

Quizplus · Accepted Answer

The importance of the commodity in consumers' budgets is an important determinant of the price elasticity of demand. This is because if a commodity is a small part of a consumer's budget, they may not be as sensitive to changes in price and therefore the demand may be relatively inelastic. On the other hand, if a commodity is a large part of a consumer's budget, they may be much more sensitive to changes in price and the demand may be relatively elastic. The other options listed are not directly related to the price elasticity of demand.

Which of the Following Is an Important Determinant of the Price