Which of the following is a determinant of the price elasticity of demand for an item?
A) the availability of a close substitute for the item
B) the percentage of a consumers budget allocated to expenditures on the item
C) the amount of time available to adjust to a change in the price of the item
D) All of the above are correct.

Question

Quizplus · Accepted Answer

All of the factors mentioned (availability of substitutes, budget allocation, and time to adjust) can affect the price elasticity of demand for a product. When there are close substitutes available, consumers are more likely to switch to those substitutes if the price of the original product increases. When a product constitutes a large percentage of a consumer's budget, they are more likely to be highly sensitive to changes in price. Finally, when consumers have more time to adjust to a price change, they may be more likely to seek out alternatives or adjust their consumption patterns, making the demand for the product more elastic.

Which of the Following Is a Determinant of the Price