Explain any two factors that affect price elasticity of demand?

1.	Explain any two factors that affect price elasticity of demand?
Answer» The two factors that affect elasticity of demand are : I. Substitutes :- When substitutes of any goods is available , then demand elasticity of such goods is highly elastic , because when price of these goods increases, substitutes are used in place of it. In the samy way, on decrease in price of these goods, use a substitutes decreases. Tea , coffee , gur , sugar etc. are examples of substitutes. II. Price level:- Elasticity of demand also depends on price level of the goods .Elasticity of demand will be greater at high price level and less at low level of price.

Answer»

The two factors that affect elasticity of demand are :

I. Substitutes :- When substitutes of any goods is available , then demand elasticity of such goods is highly elastic , because when price of these goods increases, substitutes are used in place of it. In the samy way, on decrease in price of these goods, use a substitutes decreases. Tea , coffee , gur , sugar etc. are examples of substitutes.

II. Price level:- Elasticity of demand also depends on price level of the goods .Elasticity of demand will be greater at high price level and less at low level of price.

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