Write down any 3 factors that defines the elasticity of demand

1.	Write down any 3 factors that defines the elasticity of demand
Answer» What are the factors that determine the price elasticity of demand?The durability of the product: Perishable goods have inelastic demand as their consumption cannot be postponed. On the other hand, durable goods have elastic demand as their consumption can be postponed (in case the price of that product rises).Availability of substitutes: Goods having substitutes have elastic demand and vice versa. For example, tea and coffee. They are close substitute. Suppose if there is an increase in price of coffee. In this situation, people can easily shift to tea. So demand of coffee will be quite price sensitive.Habitual Goods: These goods have inelastic demand. For example, cigarettes, alcohol, tobacco etc. If the price of such products increases, the consumers will not reduce the consumption significantly as they are habituated to consume such products.Income level: The products demanded by people with low incomes tend to have elastic demand. This is because a small increase in the price of any such product will create a significant impact on the monthlyNature of the goods: Elasticity of demand also depends on whether the commodity is a necessity or a luxury. Goods which are necessities tend to have inelastic demand whereas demand of luxury goods tend to be elastic. People generally prefer not to cut down consumption of necessities even in case of price increase.

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