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Identify the factor which generally keeps the price-elasticity of demand for a good low :
- a)Variety of uses for that good.
- b)Its low price.
- c)Close substitutes for that good.
- d)High proportion of the consumer ’s income spent on it.
Correct answer is option 'B'. Can you explain this answer?
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Identify the factor which generally keeps the price-elasticity of dema...
Lower the price of the good, the lower is its response to change in prices i.e. lower is the price elasticity. Demand of a commodity having very low price will not be effected with price fluctuations. The above explanation is due to the fact that a low priced commodity has a small place in consumer's budget.
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Most Upvoted Answer
Identify the factor which generally keeps the price-elasticity of dema...
The correct answer is option 'B' - Its low price.
Explanation:
Price elasticity of demand measures the responsiveness of demand for a good to changes in its price. It indicates how sensitive the quantity demanded is to changes in price. A low price elasticity of demand means that the quantity demanded does not change significantly in response to changes in price.
There are several factors that determine the price elasticity of demand for a good, such as the availability of substitutes, the necessity of the good, and the proportion of income spent on it. However, the factor that generally keeps the price elasticity of demand low is the low price of the good.
When a good has a low price, it means that it is relatively affordable for consumers. This affordability makes the good more attractive and increases the demand for it. As a result, even if the price of the good increases, the quantity demanded does not decrease significantly because consumers are willing and able to continue purchasing it.
Low-priced goods often fall into the category of necessities or basic goods that consumers require on a regular basis. These goods are essential for daily living and are not easily replaceable. Therefore, consumers are less likely to reduce their consumption of these goods even if the price increases.
Additionally, low-priced goods may not have close substitutes available in the market. This means that consumers do not have many alternative options to choose from if the price of the good increases. As a result, they are more likely to continue purchasing the good at the higher price rather than switching to a substitute.
In conclusion, the low price of a good generally keeps the price elasticity of demand low. This is because low-priced goods are more affordable, often considered necessities, and may not have close substitutes available.
Explanation:
Price elasticity of demand measures the responsiveness of demand for a good to changes in its price. It indicates how sensitive the quantity demanded is to changes in price. A low price elasticity of demand means that the quantity demanded does not change significantly in response to changes in price.
There are several factors that determine the price elasticity of demand for a good, such as the availability of substitutes, the necessity of the good, and the proportion of income spent on it. However, the factor that generally keeps the price elasticity of demand low is the low price of the good.
When a good has a low price, it means that it is relatively affordable for consumers. This affordability makes the good more attractive and increases the demand for it. As a result, even if the price of the good increases, the quantity demanded does not decrease significantly because consumers are willing and able to continue purchasing it.
Low-priced goods often fall into the category of necessities or basic goods that consumers require on a regular basis. These goods are essential for daily living and are not easily replaceable. Therefore, consumers are less likely to reduce their consumption of these goods even if the price increases.
Additionally, low-priced goods may not have close substitutes available in the market. This means that consumers do not have many alternative options to choose from if the price of the good increases. As a result, they are more likely to continue purchasing the good at the higher price rather than switching to a substitute.
In conclusion, the low price of a good generally keeps the price elasticity of demand low. This is because low-priced goods are more affordable, often considered necessities, and may not have close substitutes available.
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Identify the factor which generally keeps the price-elasticity of demand for a good low :a)Variety of uses for that good.b)Its low price.c)Close substitutes for that good.d)High proportion of the consumer ’s income spent on it.Correct answer is option 'B'. Can you explain this answer?
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