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Q.3:- What is elasticity of demand? State the determinants of elasticity? |
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Answer» Explanation: The four factors that affect price elasticity of demand are (1) availability of substitutes, (2) if the GOOD is a luxury or a NECESSITY, (3) the proportion of income SPENT on the good, and (4) how much time has ELAPSED since the time the price changed. If income elasticity is positive, the good is normal. |
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