..... 1. Determinants of the price elasticity of demandConsider some determinants of the price elasticity of demand:• The availability of close substitutes• Whether the good is a necessity or a luxury• How broadly you define the market• The time horizon being consideredA good without any close substitutes is likely to have relativelydemand, since consumers cannot easily switch to a substitute good ifthe price of the good rises.A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately thesame, which one has the most elastic demand?O YachtO Amputation procedures for diabetes sufferersThe price elasticity of demand for a good also depends on how you define the good.Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elasticdemand, and which will have demand that falls in between.CategoriesMost ElasticIn BetweenLeast ElasticFoodRed bell peppersVegetablesThe price elasticity of demand is also affected by the given time horizon.Compared to the short-run demand for oil, the demand for oil in the long run will tend to beelastic.

Ed(elasticity of demand) is the ratio of %change in Qd(quantity demanded) and %change in P(price).…

1. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: • The availability of close substitutes • Whether the good is a necessity or a luxury • How broadly you define the market • The time horizon being considered A good without any close substitutes is likely to have relatively demand, since consumers cannot easily switch to a substitute good if the price of the good rises. good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the most elastic demand?

1. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: • The availability of close substitutes • Whether the good is a necessity or a luxury • How broadly you define the market • The time horizon being considered A good without any close substitutes is likely to have relatively demand, since consumers cannot easily switch to a substitute good if the price of the good rises. good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the most elastic demand?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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