How much do consumers react to price changes is very important for producers. The aim is to determine a profitable price producers. Elasticity of demand is a measure of how large the degree of sensitivity of demand to price changes.
Here are the factors - factors that influence the elasticity of demand:
1. Availability of substitutes
2. The proportion of income spent on an item
3. Categories of goods (basic necessities or luxury needs)
4. The diversity of use of goods
Here are the factors - factors that influence the elasticity of supply:
1. The time needed to produce
2. The durability of goods
3. Mobility of production factors
4. Ease manufacturer newcomers to enter the market
Here are the factors - factors that influence the elasticity of demand:
1. Availability of substitutes
2. The proportion of income spent on an item
3. Categories of goods (basic necessities or luxury needs)
4. The diversity of use of goods
Here are the factors - factors that influence the elasticity of supply:
1. The time needed to produce
2. The durability of goods
3. Mobility of production factors
4. Ease manufacturer newcomers to enter the market
1 comment:
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